Question

Would you ever consider dipping slightly into your 6months expenses emergency fund for a down payment to hit 20%? Why or why not.  

Answer 1

For us personally, we use YNAB and have a lot in "savings" in excess of the emergency fund. we have our general savings of 23k which is being saved up for a down payment to move out of our duplex (hold and rent with very good cash flow) into a single family home. We then have 6 months (16. 5k) in an emergency fund, 2k in vacation funds, 4k in capital repairs, 1. 5k in regular repairs (both get 200 budgeted/month), 1k car repairs ($100/mo budgeted), about 1k in computer/phone replacement. In a true emergency all of these extras could be reallocated to monthly living expenses as we won't be buying a new computer or new cell phones, going on vacation, making capital repairs, etc. during an emergency. With YNAB, a 6m budgeted E-Fund is really 7 months since it has you budget for the next month with current months income, essentially providing a 1 month automatic buffer. We're looking at a cash-out refinance on the duplex to pull about 20k in equity giving us 43k for a down payment. For a single family home we're looking at a budget of 200-250k (250k would be very high), but even 200k with 40k down only leaves 3k in closing costs. Might have to dip slightly in to E-Fund at a 200k property, and would need to dip up to 10k into E-Fund for a 250k property. I don't think I'm comfortable with a 10k dip at our highest price range of property to boot, but I'd be fine with dipping a few thousand into it.  

Answer 2

Yes. Mostly because I don't personally feel the need for 6 months expenses in the EF. Your situation might be different. The real question, IMO, is whether you can regrown your EF to where you're comfortable fairly quickly.  

Answer 3

Yes, if you’re doing 20% to avoid PMI - then contribute what you normally contribute to your emergency fund PLUS whatever amount you saved each month by avoiding PMI, until the amount you borrowed from your emergency fund is reimbursed. And only “slightly” as you said - if you have 6 months now and this will drop it to 4 or even 3 months, then ok. If you’re going from 6 to 1 or zero, then NO  

Answer 4

Yes if your job is secure

Answer 5

Yes. If it's a primary you could even do a 80/10/10. Money is cheap right now and if you are confident you can either get back to six months or pay down the second quickly, 20 percent down should not be the reason you pass on an opportunity.