I am a disabled veteran, GS employee, and reservist. 28 years old with 795 credit score
GS job: $140K
VA disability: $1361/mo tax free
Drill pay: ~400/mo
TSP/401K : $205K, 100% C-fund
Roth IRA: $17K, 100% S&P 500
HYSA: $55K
Maxing 401K and Roth IRA.
How much house can I afford? Should I make a
down payment on a house? I am disabled so VA loan will have no funding fee and no PMI regardless of down payment. Looking at $400-500K house. Is it too much?
I know I’m doing well but I don’t exactly know how well.
Thanks!
Young disabled vet – Federal employee. Am I on track?
byu/bgknoccout92 inMilitaryFinance
Posted by bgknoccout92
5 Comments
There’s a couple people on this sub that do this for a living, so I’ll leave the numbers to them for what you would be qualified for and what makes sense as far as a down payment.
You left off how much you have liquid in a savings/checking/brokerage account though. Closing costs+down payment (if applicable)+ a beefed up emergency fund are all big requirements for a home purchase. Not to mention a couple thousand out the gate for maintenance and much more for furnishing
I don’t have too much information but I do want to say it sounds like you’re doing great! The only piece of information I have is when I bought my house when I was still in I used the VA loan and I didn’t put any money down but in todays market it might be best to put a little money down just to try and buy the rate down. What you can do though is go through the veterans united home loans and they’ll ask you all your pay information your military status and everything and it took me about 2 weeks to get qualified and then they gave me a maximum amount I can borrow and then that’s when you go house hunting. But good luck I don’t think you’ll have a problem considering your income especially if you’re in the southern states or in some of the Midwest states
Have you talked to a mortgage broker?
That’s the best way to find out how much you can afford then scale down from there to a comfortable number.
Do you get drill pay while receiving VA disability???
By my math, you’re making $160K per year, with $222K in retirement accounts, and $55K in cash. While I don’t know a lot about your expenses, it seems likely that you could swing a house in your price range right now. Should you, though? Here are some thoughts on how you might assess that:
**1. How much of a down payment are you ready to make now, and how much is ideal for a VA loan?** To get the best mortgage rates and avoid mortgage insurance costs, you typically want to put 20% down. However, since you qualify for a VA loan, you can get by with less. Talk with a loan officer with experience doing VA loans and see what the difference is between doing a 10% down payment and a 20% down payment. If the difference is significant to you, you might want to consider saving up another $25K-$45K to get the lowest interest rates and required monthly payments you can. In a pinch, you could withdraw and later replace some of your TSP contributions, but I don’t recommend that.
**2. How important is it for you to buy now vs a year or two from now?** You also may want to consider waiting, especially if you think that inflation and interest rates are likely to go down. If/when they do, the difference between something like a 7% rate and a 5% rate may not sound like much, but it can make a big difference in your payments and overall cost of the loan.
**3. Consider buying growth assets with better rates of return for pre-retirement savings goals.** You also might want to consider investing some of your savings in an S&P 500 index fund in a brokerage account, so you have assets that grow that you can use if/when you need them.
Overall, you’re in excellent shape, and while I think it’s likely a good idea to wait for your savings/brokerage investments to grow, for interest rates to come down, and for you to have plenty of time scoping out neighborhoods and competitively priced options.
May God bless you with wisdom and sound judgment as you contemplate your next moves.