Tips for Accumulating a Down Payment
Step 1
Save
Look for ways to reduce your monthly expenditures to save toward a down-payment. You could enroll for an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. Most people save a couple of years for their down payment.
Housing Finance Agencies
These agencies offer special loan programs to low- and moderate-income buyers, buyers interested in rehabilitating a home in a targeted area, and other groups as defined by the agency. Working through a housing finance agency, you can receive a below-market interest rate, down payment assistance, and other incentives.
The primary mission of Housing Finance Agencies is to boost homeownership in targeted areas, among first-time buyers and those with little money for down payments. Most of these non-profit agencies were funded with state government seed money and now operate independently.
Alternative Sources
No-down and low-down Mortgages
Documenting Your Down Payment
Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.
Take extra care to document the sources for any monies to be used for the down payment or closing costs.
- ACCEPTABLE DOWN PAYMENT & CLOSING COSTS SOURCES
- • Cash in a bank account
- • Mutual funds / stocks / IRA / 401K
- • Proceeds from the sale of another property
- • Gift from an immediate relative
- The amount you have available for a down payment will affect what types of loans for which you can qualify. Down payments typically range from 3 to 20 percent of the sales price for the property.
