To keep aside a stash of money for down payment seems like an easy thing to do. In actuality, it is easier said than done.
However, it cannot be denied that the first step towards purchasing a home is saving up for a down payment. It requires a lot of discipline, coupled with a strategic approach to be able to put aside money.
Since not many people can think through this dilemma, we decided to make things easier for you. We have formulated this post to enlighten you about options that one can use to save money for a down payment.
1) Low-down-payment mortgages
There are a number of low-down-payment options available, especially meant for first-time buyers.
For instance, there are VA loans that have got 0% down payment options available for the borrowers. VA loans are backed by the Department of Veterans Affairs and USDA loans.
FHA loans offer down payments at a low rate of 3.5%. The FHA loans are backed by the Federal Housing Administration.
Another is Conventional loans, which do not come with any backing from the government and offers down payments at a rate of 3% to borrowers with good credit.
2) Gifts and loans from family
While lenders accept down payment gifts, applying a gift for a down payment means a greater deal than just depositing a check.
To put things in perspective, the donors will have to provide proof in writing that they not only made the gift but were financially capable of doing so. This means that they will be required to provide proof in the form of bank statements, as well as a letter bearing confirming that the donation is indeed a gift and not at all a loan.
Online platforms can let you create an online profile, raise, and collect money for a down payment. However, some platforms might charge you a fee. Therefore, make sure to watch out if there is any fee or obligations if and when you decide the crowdfunding strategy a shot.
How to choose a down payment that’s right for you? Well, two steps can help you make a decision about how much to put down. First, you must assess how much you can afford or dedicate yourself for a down payment. Second, sit with your lender and explore your loan options to understand how your choice can affect overall costs.