What’s The Best Way to Get a Down Payment

For many potential homebuyers, the money necessary for a down payment is often the biggest deterrent to home ownership. A typical down payment for a house is 20%. Many people, particularly first time home buyers who do not have money from the sale of their previous home, don’t have that much cash available. This blog is about helping you with the process of homeownership by giving you some tools to acquire the most important prerequisite; the down payment.

Suppose you have found the perfect house and interest rates are still low, but the one thing standing between you and your dream home is a 20% down payment. We’ve compiled a list of several ways you can acquire enough money for a down payment. As with all aspects of the mortgage lending industry, which can be complex, these suggestions should be run past your loan officer to get their professional input prior to making any decisions:

·        Monetary Gifts - Ask your parents or a relative give you money as a gift. You may agree to pay the money back (more like a loan) but acquiring the funds in the form of a gift rather than a loan is preferable for certain mortgages. All gifts need to be documented as such.

·        Shared Costs - Ask the seller to pay all or part of your closing costs. Many loan programs allow seller contributions.

·        Zero Point Loan - Consider this as a way to help lower your closing costs. In some cases you can even take a slightly higher interest rate in exchange for a credit back from your lender at settlement.

·        Low/No Down Payment - Ask your loan officer about some of the loan programs available today that require little or no money for a down payment. Examples include; 100% financing, 103% financing, 80/15/5 loans and more.

·        Borrow from Yourself - You may have financial resources in a retirement plan, such as a 401K or Thrift Savings Plan (TSP). You may consider borrowing money from your retirement funds or from the available cash value of a life insurance policy. Consult your tax or insurance advisor for these options.

·        Sell Something of Value - You may consider selling an asset to raise cash for your down payment, such as a car or boat.

The down payment will be a critical factor in whether you get the house you want. As stated in previous blogs, there are many options available and we are here to help. Don’t let the amount of a typical down payment keep your from exploring your options to own a home.  Now is the time to buy for multiple reasons so don’t miss out on these low home prices and mortgage rates. Contact me and get the house you desire.