[quote=FormerSanDiegan]I don;t think davelj is suggesting that you put zero down. Just use zero down interest only (at whatever rate you get) to determine whether it is worth doing. This removes the need to figure opportunity cost.
This reasonable and is equivalent to assuming you would get a rate of return equal to the mortgage interest in computing opportunity cost.
Of course you get the best rates for 20% down or more (30% for investment property), so you have to weigh the benefit of lower rates against the benefit of having less skin in the game in case of substantially more downside in the market.[/quote]
Yup, that’s what I’m saying. Although when calculating the interest-only payment I’d use the rate that you’re actually going to qualify for assuming you put 20% down. Because, as you point out, to get the best rate, you gotta put 20% down. So, when looking at the comparison with rent, I’d use the RATE assuming 20% down (but applied against the entire cost of the house – as if you’re putting zero down). Hope that makes sense. And, this is looking at buy vs. rent, not looking at it as an investment. Just to be clear.
