Tips To Finding The Down Payment For Your New Home

Tips To Finding The Down Payment For Your New Home

Are you thinking about buying a new home? Gone are the days of 100% financing with zero down payment. So if you are not sitting on a pile of cash, the idea of finding the money to pay the down payment might feel daunting. But there are simple ways to raise the cash needed to get into a new home. You might actually be able to buy today….let’s explore some ideas together.

Assess Your Current Assets

The first step is to determine what cash you might have available right now. Do you have a savings account or perhaps a 401k* which would allow you to raise the money for a down payment? Are you nursing a pet project, like a vintage car or motorcycle, which could be sold for additional cash? Buying a home is one of the best ways to increase your financial health so it’s worth considering what items you currently own that could be sold.

Explore Loan Options

Not all home loans require the typical 20% down payment. FHA and VA loans are available for qualified buyers which allow a very low payment. The VA loans still offer 100% financing for qualified veterans. Even non-government loans can require as little as 5% down payment for a conventional loan. It’s important to note that any loan balance over 80% of the home value will add Private Mortgage Insurance (PMI) onto the monthly payment, so the more you are able to put down, the better.

Ask For Help

If you are unable to find the needed cash for the down payment, you might still have options. Discuss your situation with your loan officer and you might find there are solutions. Some loans allow you to use gift funds from relatives for the down payment. There are also local and state programs which loan you money for the down payment. These “silent second” loans pay for the down payment and require no payments until you sell or refinance the home. You might also find assistance through a union or other employment based programs. Finally, consider buying with a friend or family member and share the financial responsibility.

Buying a new home is a great way to add to your financial security. Building equity with a property is one way to build wealth while providing for you and your family. Finding the down payment might be easier than you think. If you are ready to explore home ownership, meet with a lender and discuss your unique situation. Then you can develop a plan to buy a home of your own.

*This post is informational only and is not intended to provide tax advice. Please discuss any tax implications, such as the use of a 401k, with your tax professional.