I am buying a house and the closing is in one month. I'm trying to
determine how much of a down payment I should make. I have 3 options:

1. Option 1: 10% down payment, monthly payment of $1,838. This will
leave me with $15,000 cash in savings
2. Option 2: 11.25% down payment, monthly payment of $1,810. This will
leave me with $10,000 cash in savings
3. Option 3: 12.70% down payment, monthly payment of $1,783. This will
leave me with $5,000 cash in savings

As you can probably figure out, I'm determing how much to put down
based on how much cash I want available in savings ($5K, $10K, or
$15K). In addition to the cash in savings, I have stock options which
are currently worth $60,000, of which most of that is vested. However,
I don't want to use any of that towards the down payment.

Any thoughts? I like the idea of having as much in savings as
possible, but I know that the less that I put down, the more I am
technically paying for the house when the interest is factored in.
Another factor is that my wife & I are both currently working but we
do plan on starting a family and living on my income only.

You never know what the future holds and it is important to have a
"rainy day" fund just in case.  I would recommend making the smallest
of the 3 options down payments to make sure you have some reasonable
level of comfort left in the savings.  If your savings gets to a
higher level, you can always pay down more of the principal any time
during the course of the mortgage.  Many financial advisors recommend
having at least 3-6X your monthly expenses in a liquid or near liquid
investment like a savings account.

I agree with Research_help, for the same as well as additional reasons.

My strategy is to always play with someone else's money. That means
finance as much as possible.

The payment difference is $55 per month or just under $20K in 30
years. Not a lot, especially when you figure you will be paying with
inflated dollars. You should be able to make the $10K you are
considering paying grow to more than $20K in the same time (jeez, a
savings bond will do that).

With $15K cash available you could invest in another property and
become a landlord. If you think owning one property is a good
investment (and you obviously do, because you are buying a house),
owning two is better. A stay-at-home mom can easily handle the
paperwork of being a landlord and can even respond to most tenant
inquiries. Get an agency to vet the tenants, for your sanity's sake.
There can be wonderful tax advantages to this.

There's a pile of other things but you'd need a tax/estate attorney to
analyze your situation for that. Good luck on your bright future and
don't wait too long to start your family!

Thanks everyone, this is great info. I tend to agree, play with
someone else's money! I'm still curious to hear other viewpoints,
thanks.

Brian,
I also agree with the above: save for a rainy day, and maybe some
unexpected cost with the new house, changes in income (as you
mention), etc.
Myoarin

I haven't bought a house with a small down payment in a while, so this
may no longer be true...

It used to be that if you put down less than 20% down payment you had
to pay PMI.  (Private Mortgage Insurance)  This added some number of
dollars to your monthly payment ($35 - $50 comes to mind, but that
could be way off).  This amount could really add up...  I believe it
also may have made the loan harder to sell (to Fannie Mae?), so
lending companies charged a higher interest rate.

So there is (was?) some benefit to a larger down payment.  However,
there is a way around the disadvantage: Take out an 80% first loan
(where you will get the best current interest rate and no PMI charge)
and a 10% second loan, or HELOC (Home Equity Line Of Credit).

Anyway, I don't know if this is still valid in today's RE market, but
thought I'd mention it.

J.

Oops, forgot another possibility to mention.  I'm assuming the cost of
the house is ~$400,000.  You could do an 80% first loan and a HELOC
second.  Initially put down only 10%.  As soon as the loans are
issued, PAY DOWN THE HELOC WITH YOUR REMAINING SAVINGS.  So, in your
case, pay off $15,000 of the HELOC with your remaining savings.  You
can still get this money back whenever you want by simply writing a
check (that's what a HELOC is for).  Meantime, your "savings" is
reducing the amount of interest you are actually paying.  And the
amount of interest payments you are saving (for example, 6.5%) will be
GREATER than the interest you would have earned in a bank account or
money market fund (for example, 4%).  Is this clear?

J.