The downpayment has been an obstacle to homeownership for a long time. This is why zero % down programs like VA Loans are so popular, for those that qualify.
FHA loans do a great job of lowering the cost of entry but even at 3 to 5% for a downpayment, this is still difficult for many young people. Especially in an era of stagnant wages and climbing home prices.
Downpayment Assistance programs are a fantastic alternative for homebuyers and go a long way to getting people on the path to homeownership. We see these programs for both Conventional and FHA loans. My experience here in Colorado has been primarily with FHA loans and downpayment assistance from CHAFA a.k.a Colorado Housing and Finance Authority.
If buyers qualify, they receive funds to cover the downpayment for the downpayment. This loan comes at a higher interest rate and while some buyers have an issue with that, the program at least gets them in the game.
Traditional Downpayment Saving...with a Modern Twist
The challenge of saving for a downpayment has actually been seen as an opportunity by some ingenious tech entrepreneurs.
Tech companies and Social media are creating apps, sites, and programs to show first-time homebuyers, "How To Save For A Down Payment On A House" and help them do it.
Using a combination of crowd-sourced funding from family and friends along with cash back credits from participating retailers these apps are bringing a modern solution to an age-old problem, saving for a downpayment.
At the end of the day, the goal is to get into a home and start building equity. The vehicle isn't as important as the goal, it's just a matter of what works.
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