On the highway to home-ownership, coming up with a sufficient down payment continues to be one of the biggest roadblocks. In fact, many prospective home buyers, particularly first-timers, find it hard to overcome this challenge without the kindness of loved ones.
But turning on the family money faucet isn’t an option for everyone. And not all home buyers have friends with spare cash to contribute. That’s OK; you can help yourself buy a house. Here’s how:
1. Coddle your credit score
2. Seek out low-down-payment loans
Many people think you need a 20% down payment to buy a house — but they’re wrong. Qualified buyers can get a conventional loan with a down payment as low as 3%, an FHA loan with 3.5% down, or VA and USDA loans with no down payment at all. Lower down payment requirements can reduce the amount of time needed to gather sufficient funds, which means you may be closer to your housewarming party than you think.
How to do it: Contact lenders that specialize in low- and no-down-payment mortgages, to get a list of qualification requirements. If you’re not ready now, ask what you can do to get ready.
3. Take advantage of down payment assistance
How to do it: Investigate first-time home buyer programs in your state. Read over the eligibility requirements for down payment assistance. If you have questions, talk to a participating lender or contact the agency directly.