Down Payment Help

One of the most stressful realities of the home-buying process is the amount of money coming out of your pockets, but there's ways to minimize how much you have to spend.

Ask for the sellers help.

The home seller may be willing to help buyers with the closing costs, via seller concessions. However, realize that lenders do limit concessions, depending on the mortgage type. For example, the FHA’s mortgages have a cap of 6 percent the sales price; Fannie Mae-backed loans have caps between 3 percent and 9 percent.

Explore government options.

Some home buyers may find down payment help from state, local, or even national programs. For example, the U.S. Department of Housing and Urban Development offers several programs, such as assistance with down payment and closing costs. Most HUD programs are geared to individuals who meet certain income or location requirements. Check out links by state. HUD also offers assistance through its Good Neighbor Next Door Sales Program for law enforcement officers, firefighters, teachers, or EMTs. For veterans, the VA offers loans that often require zero down payment or private mortgage insurance.

See if your employer will help.

Employer Assisted Housing (EAH) programs can assist low- to moderate-income employees with a down payment through their employer. Ask the human resources or benefits personnel at your employer if your company participates in an EAH program.

Look into special lender programs.

Some lenders offer specialized programs to help too. With FHA mortgages, borrowers may need just 3.5 percent for a down payment (but make sure they take into account mortgage insurance, which could add another $300 to a monthly mortgage payment). Some lenders, such as TD Bank, offer a 3 percent down payment with no mortgage insurance program. Check with your regional bank for possible down payment assistance or first-time buyer programs.

 

Source: HouseLogic (october 26, 2015)