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Where to get Down Payment Money for Your Home
By: Andre McFayden, Thu Jun 8th, 2006
Down Payment Money - For most first-time homebuyers,
that is probably the biggest hurdle they face in their quest to
purchase a home. These days, one can easily find a loan program
that allows the buyer to put down only 10% of the purchase
price. Even at 10% down, the homebuyer will have to come up with
$25,000 for a median-priced home in Fresno, CA! That is a lot of
money for the average person. How does one come up with the down
payment?
Here are some ideas:
Savings This is obvious but if you’re serious about
realizing the American Dream, you’ll have to save, save, save.
Track your spending for a month and you might be surprised at
how much extra you can save.
Research 1st-time Homebuyers Assistance Programs Check
with lenders regarding down payment assistance programs
available for first-time homebuyers. There are state and federal
loan programs designed to assist first-time homeowners, e.g.
Federal Housing Administration (FHA), U.S. Department of
Veterans Affairs (VA), California Housing Finance Agency
(CalHFA) and California Department of Veterans Affairs
(Cal-Vet). Your city and county might have some financing
programs as well.
Borrow from parents, siblings, relative or friend Can you
possibly borrow part of your down payment money from any of
them? Have you asked?
Borrow from your 401K plan Some 401K plans allow you to
borrow against them. Check with your employer or plan
administrator for more details.
Tap into your IRA First-time homebuyers can withdraw up
to $10,000 without penalty from an IRA/Rollover IRA to use as
down payment money to purchase a primary residence.
No Money Down loan programs What about no money down loan
programs? Yes, you’ve seen the commercials on late-night TV…”Buy
a house with Zero Down!”
There are these types of programs available but be prepared to
pay higher interest and loan fees. How much higher depends on
the lender and your credit score.
Even with no money down programs, you will most likely still
need to come up with some money for closing costs and any cash
reserves required by the lender.
It is also important to remember that in addition to the down
payment, the homebuyer must be able to afford the monthly
mortgage payment. The lower the down payment, the higher the
loan amount and the higher the mortgage payment.
To learn more about downpayments, visit Empire
Real Estate - Downpayment Money, and No Money
Down Loans . This article may be reprinted only if credit is
given and all links are kept intact. Copyright©2005 Empire Real
Estate Group, Inc.
About the author:
Andre McFayden is Vice-President of Empire Real Estate Group,
Inc. in Fresno, CA www.empirefresno.com
