Coming up with that down payment has been the obstacle that stops many people from buying a home. Once you get in the real estate circle it can be much easier to move up as you can use your equity from the sale of an existing house as a down payment for a new home. But just starting out in life can be tricky. Here are 5 secret ways to gain that down payment source.
You just never know unless you ask. Lenders will allow you to get money from relatives or even friends as a gift for a down payment. You might as a few relatives to pitch in. This has to be a gift though. If there is any promise of paying them back, the lender will see this as more debt and count it against you in the debt to income ratio. You can, however, pay them back in different ways; babysitting, a year of lawn mowing, or whatever you can come up with, but it can't be a debt.
Every county and city usually has some type of local option, grant or assistance program when it comes to down payments. Some of these programs are for low to moderate income and some help first-time homebuyers. Ask your lender about certain programs you might qualify for. Some require homeownership classes or counseling and some require certain income verifications but you'd be surprised at how much you can get from these local programs.
Universities and municipal departments that employ first responders like police and firefighters may be able to help with down payments and other home buying tactics. Some large companies may offer a down payment program in their negotiation package so try and ask. You just never know. Check with your company's human resources department for options. Often, people don't use these perks because they just don't know about them.
Ah, the old savings account. There is something satisfying about simply saving for your down payment but it's easier if you tighten your belt where you may have been spending too much. If you buy coffee every day for $2-$3 that adds up quick. Try to shave off a few dollars each week and instead put that money into a jar or savings account once a month. You can have $5000 in a year just by bringing your own lunch and/or coffee to work instead of buying it.
There are a few times where it makes sense to borrow from your 401(k) or IRA. Buying a house is another form of investment and some allow you to borrow penalty-free if you apply it toward a home investment. This might not be right for everyone so ask your lender or financial advisor if this is a good move for you.
Give me a call anytime to discuss financing options. Because I've worked for years in the Las Cruces real estate market, I can point you
Washington Realtor says:
Each county and city now have their own programs where once it was federal. This is great because the city can offer better programs that fit with their average priced homes and not a blanket one that only works in some cities in the U.S.