Yes, you can make that down payment
College is over, but you still have to do the kind of math that matters. Like: How am I supposed to save $50,000 for a down payment on a house?
If this question sends you into a shame spiral, making you second-guess your career, the city you live in and the jacket you bought yesterday, stop right there.
You don’t need to save 20 percent of a home’s value for a down payment. Yes, it could lead to a cheaper mortgage payment or lower interest rate. But many federal, state and local programs will let you buy a house with less down, or help you pay for the down payment outright. Here are your options — and how to decide what’s best for you:
First-time programs
You may not know it, but there are tons of first-time homebuyer programs that can make homeownership more affordable. State and local governments invest in them because high rates of homeownership can mean more stability in a community, and more accumulated wealth for local families, says Marietta Rodriguez, interim senior vice president for national initiatives at the nonprofit NeighborWorks America.
Daria Victorov, a certified financial planner at Abacus Wealth Partners in San Mateo, Calif., is buying a home this way. After applying for about 10 properties in San Francisco’s affordable housing lottery, Victorov won the chance to buy a one-bedroom apartment. Since she makes less than the program’s income cap — which for 2018 is about $83,000 per year — she was able to put 10 percent down, get a 30-year, fixed-rate mortgage at 3.4 percent, and pay about half the amount the unit is worth.
Take advantage of your city’s or state’s generosity. Look up local programs through the U.S. Department of Housing and Urban Development website. You can also go directly to your state’s housing finance agency, Rodriguez says, and ask about resources. The National Council of State Housing Agencies has a handy list of agencies to contact.
Look into national programs, too. A loan through the Federal Housing Administration lets you put 3.5 percent down, for instance. These may require you to pay extra mortgage insurance each month; use a mortgage calculator to see how much it would cost.
When to go for it
Just because you can buy a home with 3.5 percent down doesn’t mean you should.
Buying your own place is a big commitment, so follow the golden rules of homebuying no matter how large a down payment you’re planning to make. Consider buying when: ■ You plan to live in the same place for five years or more.
■ You won’t clean out your savings to pay for the down payment and closing costs. You’ll still need money left over for maintenance, repairs and nonhousing emergency expenses.
■ Your credit score is in good shape. A score of 720 or above in the FICO scoring model will get you the best chance at qualifying for a loan.
Even if homeownership may be closer than you thought, renting is not a dirty word. Until you know where you want to put down roots, you can keep saving and enjoying the freedom of asking your landlord to repair things. But when the time comes to buy, know there’s help out there.
The price of jet fuel has gone up 50 percent in the past year, and airline executives are warning that they may have to raise ticket prices and cut capacity if fuel costs continue to rise.
Delta Air Lines last week became the latest carrier to cut its profit forecast because of the sharp rise in fuel prices. American Airlines had taken that step a little more than a month ago, when it estimated that the higher prices would cost it $2 billion this year.
With the summer travel season about to begin and many of their seats already booked, the airlines have indicated that they are not going to act immediately. In fact, Delta told investors last week that it planned to make decisions in the next month on capacity in the fall, when demand usually drops off.
A growing economy and an increasing reliance on fees, for everything from baggage to premium economy seats, have spurred several years of strong profits for airlines, and they still expect to be profitable this year. But “probably not at the levels we were anticipating in December,” said Alexandre de Juniac, the head of the International Air Transport Association.
And with newer, more efficient planes, fuel now accounts for 17 to 22 percent of airlines’ operating costs, down significantly from the last time fuel costs spiked, an industry consultant, Robert Mann, said.
Brent crude, the global benchmark, was trading at about $75 a barrel last week, up about $20 in the past year. This month, the Organization of the Petroleum Exporting Countries is set to discuss whether to relax the oil production limits that have helped raise prices.
When oil prices hit record highs a decade ago, airlines added fuel surcharges to tickets. When oil prices dropped a few years later, those extra charges were slow to disappear, as the carriers chose to use the revenue to reinvest in their business, pay dividends to shareholders or raise employee pay.
More recently, the positive economic environment led airlines to add flights in response to strong ticket sales, said Patrick DeHaan, the head of petroleum analysis at GasBuddy, a web- and app-based fuel-tracking platform.
“Some of the big legacy carriers have been vocal about their plans to add capacity this year,” DeHaan said. “So what you’re seeing is some pretty healthy demand for jet fuel as the economy continues to grow.”
DeHaan said he did not expect any immediate action by the airlines.
“There’s a lot of pressure on fares right now, and it’s going to be a challenge raising fares, especially in the summer,” he said. If current jet fuel prices emerge as a new norm, he added, “I would look for more increase in the fall.”
And eventually, the high price of fuel could put newly added routes on the chopping block, said Patrick Surry, chief data scientist at the travel app Hopper.
“If it continues to rise, we’ll start to see a knock-on effect on pricing and consolidation, maybe some shrinkage of capacity and routes,” he said.
George Hobica, founder of Airfarewatchdog, said investors’ concerns would add a sense of urgency to how and when airlines responded.
“Wall Street is just going to slam them if they don’t increase prices or reduce capacity,” he said.
This might not mean higher base fares, thanks to greater competition from low-fare carriers, Hobica said, but travelers might see fuel surcharges become common again or have to pay higher fees for checked bags, Wi-Fi and other ancillary services.
In particular, industry experts predicted that travelers flying internationally, booking business-class and premium-economy seats, and flying less competitive routes — especially to or from smaller airports — could expect to pay more in the fall. They may also have fewer flights from which to choose.
“This summer may well be the last time you’re going to get a great price to Europe,” Surry said.