CHICAGO – March 30, 2016 – For many first-time buyers, the downpayment is a significant hurdle to homeownership and saving can take years – but it's not an impossible feat. HouseLogic recently featured several outside-the-box ideas to help:
Crowdsource Maybe instead of a traditional wedding registry, buyers can use a website geared to saving for a future home. Sites like Feather the Nest and Hatch My House can be used to raise funds for a downpayment. Hatch My House says it's helped raise more than $2 million in downpayments for home purchases.
Ask the sellers for help The home seller may be willing to help buyers with closing costs, via seller concessions. However, lenders many times limit concessions, depending on the mortgage type. For example, FHA mortgages have a cap of 6 percent of the sales price; Fannie Mae-backed loans have caps between 3 percent and 9 percent.
Explore government options Some homebuyers may find downpayment help from state, local or national programs. For example, the U.S. Department of Housing and Urban Development (HUD) has several programs, such as assistance with downpayment and closing costs. Most HUD programs are geared to individuals who meet certain income or location requirements. HUD also offers assistance through its Good Neighbor Next Door Sales Program for law enforcement officers, firefighters, teachers and EMTs. For veterans, the VA offers loans that often require zero downpayment or private mortgage insurance. In Florida, the Florida Housing Finance Corporation can sometimes help.
See if an employer will help Employer Assisted Housing (EAH) programs can assist low- to moderate-income employees with a down payment through their employer. Ask the human resources or benefits personnel at your employer if your company participates in an EAH program.
Look into special lender programs A few lenders offer specialized programs to help too. With FHA mortgages, borrowers may need just 3.5 percent for a downpayment, though mortgage insurance could make monthly payments higher. Some lenders, such as TD Bank, offer a 3 percent downpayment with no mortgage insurance program. Check with regional banks for possible downpayment assistance or first-time buyer programs.
Source: "5 Ways You Didn't Know You Could Save for a Down Payment," HouseLogic (Oct. 26, 2015)
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