5 Ways to Get Money for a Down Payment
It stands between you and your home, so how do you make the most of it?
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The more money you can pay up front, the more options you’ll have when you look for houses, and the less you’ll have to worry when you’re in your new home. HER, REALTORS® is providing a few tips for getting money to pay your down payment.
1. Local down payment assistance programs
The best down payment assistance programs are run by local governments. The requirements vary by city or county. Some are only for people with low to moderate incomes, while others are for any first-time homebuyers. Check what kind of programs your local city or county government offers.
2. Gifted money
If you want to use money that you got from friends or family, your lender will require a letter to prove that the money has been gifted, not loaned. If you’re getting an FHA loan, they’ll also require a bank statement to prove that the gift money came from that person. The rules for gift money also vary depending on the type of loan.
3. Talk to your employer
Universities and municipal departments that hire firefighters or policeman often provide down payment assistance programs, or other home-buying programs, to employees. Also, big companies often use relocation assistance programs as an incentive to top-level employees. Ask your human resources department about these options.
Saving small amounts of money over time can help you a lot in the long run. Here are some tips to keep your budget in check:
- Keep track of everything you spend, even the small stuff. There are budgeting apps to help with that.
- Differentiate between necessities and wants
- Use a debit card that charges very little in fees
- Try using the 50/20/30 plan as a guideline
5. Borrow from yourself
Sometimes, it makes sense to take some money out of your 401(k) or IRA. Of course, that’s not always a good idea, but if it gets your down payment to 20%, gets your mortgage interest rate down, and allows you to put the money you saved back into your retirement fund, then it might be worth it.
Though there’s no special secret that will make it easy, we hope these tips help you. Talk to your financial advisor to make sure you take the best path forward when you’re becoming a homeowner.