You’ve saved up for the down payment. You’ve toured a dozen apartments. Your friends are all saying "buy now before prices go up." But here’s the thing most people miss: the down payment is just the entry ticket. The real question is whether this house will be an asset or a liability over the next decade.
I’ve been thinking about this after reading Wu Jun’s take on the three principles of home buying. He calls it "three buys, three don’t buys." Let me translate that into something you can actually use.
First, only buy if you can stay put for at least five years.
Think of transaction costs as a giant tax. When you buy and sell a house, you lose about 6–8% in fees, taxes, and the spread between bid and ask. If you move in two years, that’s a 3–4% annual loss just from switching. Renting would have been cheaper. The math is brutal: unless your house appreciates faster than those costs, you’re burning cash. So ask yourself: is your job stable? Are you planning to stay in this city? If the answer is "maybe not," don’t buy.
Second, never buy a house that stretches your monthly payment beyond 30% of your income.
This is the one rule most people break. They look at the down payment and think, "I can afford this." But the real cost is the mortgage, property tax, maintenance, insurance, and HOA fees. A friend of mine bought a beautiful apartment with a 20% down payment, but his monthly payment ate 50% of his salary. One job change later, he was underwater. The rule of thumb is simple: keep your total housing cost (mortgage + taxes + insurance) under 30% of your gross monthly income. If you can’t, you’re not buying an asset—you’re buying a leash.
Third, prioritize location and cash flow over square footage.
A house in a bad location is like a car with no engine. It might look nice, but it won’t take you anywhere. And if you’re buying for investment (even if you plan to live in it), ask yourself: could I rent this out easily? Would it generate positive cash flow if I moved? That’s the real test of an asset. If the answer is no, and you’re not planning to stay for 10+ years, you’re better off renting and investing the difference.
These three rules are not complicated. But they’re hard to follow because emotions get in the way. The housing market feels urgent. Everyone around you is buying. The pressure is real. But the smart move is to take a step back and run the numbers—not just the down payment, but the full picture.
Remember: a house is a tool, not a trophy. Use it wisely.