Here is a question that I hear quite often:
Do I need to put 20% down to purchase a home?
The answer is NO; you don’t have to. The more you put down, the less risky it is for the lender. As a first-time homebuyer, it is tough to come up with that kind of money. Unless you are wealthy or you sold your house and buying another one, then you can use the proceed of the sale of your home as a down payment, other than that, it is hard to come up with 20% down nowadays.
Here are some Home Down Payment Options for you:
Crowdsource your Dream Home: People uses sites like Kickstarter to fund creative projects so why not crowdsource your first home? Use site like Feather the Nest or HomeFundIt to raise your down payment!
HUD has a list of links by state that direct you to the appropriate page for information about your state.
You can also check “Help Buying A New Home.” USA Government has a lot of programs to help First Time Homebuyers.
There is also FHA-insured mortgage: under this program, if you qualify, the down payment is only $100; you can even finance the closing costs.
Check with your city if they offer some homeownership help.
Check with Your Employer
Employer-Assisted Housing (EAH) programs help connect low- to moderate-income workers with down payment assistance through their employer. If you work for a participating EAH employer, you can apply for a loan of up to $8,000 for down payment and closing cost assistance, the guideline is different from one state to another. In most case, the loan is interest-free and borrowers have 10 years to pay it back. Ask the human resources or benefits personnel at your employer if the company is part of an EAH program.
Check With Your Lender: Ask them about their Special Lender Programs for First Time Homebuyers. People are unaware that many lenders offer programs to help people buy a home with a small down payment.
They have that the biggest misconception that they need 20% for the down to buy a house. There are a lot of programs out there that need a total of 3% or 3.5% down.
Conventional mortgage 3% down: Now just a 3% down payment is needed. That’s even lower than FHA requires. … While the FHA loan has its benefits, it comes with high upfront fees and permanent mortgage insurance. The new conventional 97% LTV program is a safer bet for the future, requiring no upfront mortgage insurance fees and cancellable monthly PMI. Ask your Lender!
Seller Concessions: Yes that’s right, you can ask for the seller to help you with your closing cost! Depending on the type of mortgage you get the lender allows sellers contribution. For FHA mortgages, the cap is 6% of the sale price. For Fannie Mae-guaranteed loans, the caps vary between 3% and 9%, depending on the ratio between how much you put down and the amount you finance. The cap varies also depending on lenders and programs.
Please talk with your real estate agent about this as it has to be part of the purchase contract for the lender to approve it.
See, there is hope for first-time homebuyer!
Any question, please feel free to leave them in the comment box below. 🙂