Down Payment Fears

Thinking of buying your first home ever and terrified of the down payment? It’s so exciting but thinking about how much money you need can cause you serious anxiety.

Take a deep breath… it may be a lot less than you think! Stay with me as I offer some great ways to minimize the amount of down payment money you need to buy your first home and start building real wealth.

Down Payment Help

one individual helping another up a hill It’s no secret that saving for a house can be a difficult task. It can take some years to build up enough savings for that down payment and to finally make your dream of owning a home a reality. Here are some ways to reduce the amount needed for your down payment to purchase your home:

If you are (or were) in the military, you may be able to use your VA entitlement to buy a home with $0 down payment. For more information about the VA program, check out our Use Your VA Benefits To Purchase A Home blog.

If you live in an area where the USDA loans money to purchase homes, meaning it’s rural or suburban but not urban, AND you are considered to be a low to moderate income borrower, USDA loans are also $0 down payment loans.

An FHA loan requires 3.5% of the purchase price as the down payment. So for a $300,000 house that would be $10,500 for the down payment. This is a whole lot less than the 20% down which many think is required!

Down Payment Assistance

Believe it or not, assistance to help you buy a house really does exist. Down payment assistance (DPA) helps homebuyers with grants or low-interest loans, reducing the amount you need to save for a down payment.

There are many of these types of down payment programs that vary by location since distributions are operated by State, county, and city governments, so be sure to check with your local lender for specific availability and qualification parameters for these different types of down payment assistance.

If you’re getting a tax refund, you can use that money toward your down payment. Every little bit helps!

Certain types of retirement accounts allow you to “borrow” money to purchase a home as your primary residence. This could help out a lot with the amount needed for your down payment. Check with your accountant to find out if yours will allow it and what the terms would be.

It’s not unusual to ask family members for money to help with the down payment as you buy a home. You’ll have to be able to prove that the money is truly a gift and that you’re not expected to repay it – EVER! Usually, a signed letter from the person giving the gift is sufficient.

Ask For Help

chalk board with who what where when why and how Depending on what market you are purchasing your home in, you may be able to ask the sellers themselves for a cash credit to be used towards your funds to close. This will help reduce the amount you need for your down payment. Be sure to check with your real estate professional about the feasibility for this to happen.

Even with zero down payment programs, you still need money in the bank to buy a home.

The last thing we want is for you to buy a house and lose it to foreclosure six months down the road. If you need to talk about how to save up money for your down payment, contact us here at The Old Mill Group. We’re here to help you achieve your goal of owning your first home.