Does it make sense to deplete all of my savings to buy a house

I was once asked: Is it a good idea to purchase a house with 100% of my cash before the age of 25?

That depends. From a loan qualification standpoint, there's no requirement for cash reserves after closing. From a practical standpoint, you'd want to evaluate how secure your income is, and how quickly you'd be able to re-establish an emergency fund. Emergencies happen, and having cash available to handle them avoids having to incur debt. Opinions vary about how much you should have in reserve; some say you should have 6 months' expenses available. What it ultimately come down to, I think is at least partly your personal comfort level.

You don't mention how much you plan to put down on your purchase. If you are thinking about a 20% down payment, consider 10% or less, to preserve your liquid cash. You'll pay mortgage insurance (around .5%), but you can get it removed once you can document that your loan balance is 80% of the home's value or less.

Another thing to keep in mind is that even though prices have increased significantly, the difference in cost between owning and renting is quite small in many areas. Prices are continuing to rise in most markets, and mortgage rates are likely to rise in the future. Those would be some more data points in deciding to buy now or later.

Hope this helps.

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