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I mean - I could afford a home now, it's just stupid expensive and I'd be leveraged up to my eyeballs. You do usually need to have the deposit in on-hand cash (though if you're sneaky and an utter idiot you could probably find some way to borrow for the down payment).
I understand where you're coming from but it's accurate language to use because a lot of people technically could afford to buy homes right now they just know it's dumb and realize the market is about to collapse and they'd end up underwater on like an 8% mortgage.
I used to think that maybe the housing market is overheated and prices will go down, so I should wait before turning to the mortgage.
It was almost 17 years ago and the market is now worse than it was then
People have been saying the housing market is about to collapse since 2012.
I borrowed for my down payment. It was in 2009, and I bought a 3bed/2bath house in a major city for ~$100k that is worth probably close to $500k now.
Am I an utter idiot, or are there circumstances where borrowing for the down payment is the right move?
There are circumstances when it's appropriate but it's really risky. It's extremely easy to find yourself underwater in debt if you've borrowed the full amount. In 2009 when the housing market had fully crashed it was probably an acceptable level of risk.
I could make mortgage payments standing on my head considering what I pay in rent. It’s the down payment that’s the killer for me.
With persistent deflation, that down payment would have to be 100% of the price of the house.
As for right now, you don't need a 20% down payment for a house. That just avoids mortgage insurance. You can get rid of that once the remaining mortgage is at ~80% of the current value of the house. We got rid of ours in 3 years with a 10% down payment but that was in a booming market in the fastest growing large city in the country. It may not even make financial sense to buy in your area. If it is going to be an extra $1000+/month to buy vs renting, stick to renting and make sure you are filling up your Roth IRA and if you have more, throw it into a savings account which actually bears interest now.
And of course if you are doing something as lavish as eating avocado toast or getting coffee from a coffee shop....keep doing that of it makes you happy. It is not going to really amount to shit.
Aside, it is absolutely fucking insane that rents usually far exceed mortgages. The rent does need to account for the lack of liability for depreciation property damage (like, if your apartment floods you're not on the hook to replace your floor boards) but in a lot of markets it's become entirely detached from reality.