Down payment funding alternatives

For many buyers, especially first-time buyers, saving up the funds for the down payment can be a seemingly insurmountable hurdle to home ownership. This doesn’t have to be the case. As your mortgage broker, I can help you find creative ways to come up with your down payment.

Using a gift for your down payment
One way to fund a down payment is by using a gift. For many loan programs, a gift may be used for a portion or all of the required down payment.  Money given as a gift for a down payment can’t come from anyone.  Family members are the usual source.  And sometimes an employer may also be acceptable.   If this is an option open to you, please let me know.  I can help you determine which loan programs accept gift funds for down payments and who may give the gift.   I’ll also supply the gift letter that the person giving the gift is required to sign.  The gift letter states that the funds are a gift and will not be paid back.

Down payment assistance programs

If a willing and able family member is not available, buyers now have the option of turning to a non-profit for down payment assistance. 

Depending on your location, and the availability of funds for your area, this program is great for providing for low to moderate income levels. 

Generally, a down payment assistance program will give the buyer money to use toward the closing costs, pre-paid expenses and even the down payment.  Having the seller contribute the maximum allowable, and adding this feature can help you get into your home with little to no money down.

This can be a good option for buyers who don’t have other means of securing a down payment.  However, you should be aware that this means of funding the down payment may inflate the selling price of the house.  You’ll want to consult with your real estate professional about how such a program may affect the selling price.

Zero down mortgage loans

Service persons and veterans can qualify for a VA Loan that requires no down payment.  VA Loans are guaranteed by the U.S. Department of Veterans Affairs.  In addition to no down payment, these loans usually offer a competitive fixed interest rate and limited closing costs.  While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.

One other option for a 100% loan is a USDA mortgage.  The guidelines for a USDA loan are "income and address" specific.  To determine if you might be eligible, please contact me and I will be happy to look this up for you.

Homes owned by Fannie Mae and HUD are both great for first-time homebuyers.  Both entities offer low down payment options and can even lower some of the costs involved.  As me how you can find homes that will qualify for these programs.

There are also private sector alternatives that offer 100% financing of the home purchase price.  Let me help you find the down payment and mortgage alternative that’s right for you.