Get Down Payment Help
With all the talk about buying a home in 2009 many first time home buyers are looking at buying their first home. However, according to the National Association of Realtors®, first time home buyers typically have about 4% of the money they need to qualify for a mortgage. Most home purchases require at least 6-7% of the sales price of the home to qualify for the home loan.
With so many first time buyers short on the money they need to purchase a home we feel that it is important to spell out some ways to get some down payment help. You may be someone who needs help with coming up with money for your down payment for your first home purchase. If so keep reading.
Get Down Payment Help From The Following Sources
It does matter what type of mortgage loan program you decide to go with to buy your first home. Each loan program like: FHA home loans, Fannie Mae and Freddie Mac Conventional Mortgages, VA Loans, and USDA Rural Housing Mortgages all have slightly different guidelines for what is acceptable for where and how you get help with coming up with your down payment. Make sure you discuss this with your loan officer very carefully as you qualify for your mortgage. The following are general acceptable means for getting a down payment help.
- Funding from any Federal, State, or local municipality, or HUD approved housing counseling agency in the form of government down payment grants or other down payment assistance programs
- Get a gift from a family member or a family relative that covers 100% of your down payment and closing cost requirements. There is a particular procedure that you need to follow as you do not want to have your relative just give you the money and you plop it into your checking account. You need to track where the money comes from so work closely with your loan officer to make sure you do it according to guidelines.
- Borrow money from your 401K or IRA. Be careful here that you give yourself enough lead time to get your money if you are going to borrow it from these sources. Also, with using these sources you will have to pay the money back so there will be some impact on your debt to income ratio and your income qualification. Again, make sure this is carefully analyzed with your loan officer.
- HUD and FHA approved non profit housing agencies can provide gifts and grants.
- Money that you have in your bank account already is a great source for down payment.
- Sale of property you already own like a car or boat. Make sure to check in with your loan officer before you sell anything like this to raise money for your down payment if you are doing while trying to qualify. If you are not in a time crunch, you may want to sell your property and stick the money in your bank account ahead of time so that it is in your account for at least 60 days before you have an underwriter look at your financial documents. Large deposits must be documented and cars and boats can be tricky if you do not follow documenting this type of transaction by the book.
- You can also borrow money against property you already own such as a car or home. In this case you will have to make sure that the extra monthly payment you will have to the new loan will not prevent you from qualifying by throwing your debt to income ratios over 45%. Again, the idea is to work with your loan officer to make sure you are within guidelines if you are going to get money this way.
- You employer can give you the money in some sort of employer/employee contribution program. These programs are often tied to the company’s employee retention program where you as an employee contribute to an employee home buyer plan and the company gives you some type of matching fund. Check with your HR department about this kind of program.
VA and USDA Rural housing programs do not require a down payment for most loan scenarios so you will not have to worry about any down payment help for these programs.
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