Dear Liz: You were way too harsh on the new doctor who was frustrated that he couldn’t buy a million-dollar home because he didn’t have a 20% down payment. At 33, a doctor with a $250,000 income has on average about $250,000 in school debt. It took him 15 years to get through school, and he’s had no chance to save. While no one deserves a million-dollar home, he has earned the chance to look at buying one if he can.
Answer: He can look all he wants, but his sense of entitlement is running up against tougher lending standards that require borrowers to have more skin in the game (that is, a significant down payment, particularly for large mortgages).
The young doctor had convinced himself that there were no decent homes in good school districts in San Diego that sold for less than $1 million, which is ridiculous.
By lowering his sights, he could qualify for a conventional mortgage that would require a much smaller down payment (as little as 3.5%) and then trade up as his circumstances — and industry lending practices — improve.
The young doctor didn’t mention having any student loans, but if he has significant debt, that’s even more reason to buy a more modest home so that he’s not saddled with the equivalent of two mortgages — his home loan and his education debt.
Here’s another perspective:
Dear Liz: Loved your response to Mr. McMansion and his complaint about not being able to buy a $1-million home. Keep telling the truth . . . no matter how painful some people may think it is!