July 1st, 2015 7:10 AM by Jackie A. Graves, President
Buying a house has always been
a dream. And with rising rents across the country, you know you might even save
a few bucks every month as a homeowner. Not to mention the tax write off and
the long-term equity. If it weren't for that whole down payment thing, you'd be
having a housewarming party right now.
If you're a first-time
homebuyer or have not purchased a home in the last two years, an FHA loan may
be your best bet because you only need to come up with 3.5 percent down. On a
$250,000 house, that's $8,750. Seem impossible? Here are 10 ways to come up
with the cash.
1. Side work
Now don't give the idea of side
work the side eye. We don't mean anything untoward here. The reality is you can
take on some extra work in your field or make money by monetizing a hobby.
"No matter how mundane or
insignificant your talents seem, there are other people out there who don't
have those talents — and they might be willing to pay you for your
skills," said Forbes. "If you're good at making things,
look into selling your wares on Etsy. Woodworking, knitting, sewing, and graphic
design are all in demand. Check out Taskrabbit, a site that hires you out to do
household chores and errands for people in your community. Things like
assembling IKEA furniture, shopping, pet sitting, and more can yield a
surprising amount of money to add to your down payment fund."
2. State down payment
States like Colorado and
California offer programs for down payment assistance that are typically tied
to income limits. California's CalHFA agency offers CHDAP,
"a deferred-payment junior loan -- up to 3% of the purchase price, or
appraised value, whichever is less" for down payment and/or closing costs.
Colorado's CHFA program is a
grant of up to three percent of "up to 3 percent of your first mortgage
loan to help cover some of your down payment and/or closing costs."
The U.S. Department of Housing
and Urban Development's (HUD) website has a
state-by-state list of programs.
3. County and city down payment
"At least one down payment
program is available in all 3,143 U.S. counties, and more than 2,000 counties
have more than 10 down payment programs available to prospective
homebuyers," said HousingWire. For the report, RealtyTrac looked at 2,290
down payment programs from Down Payment Resource's
Homeownership Program Index and
found out of more than 78 million U.S. single family homes and condos, more
than 68 million would qualify for a program. That equates to an average of
You can get more information
and check eligibility here.
Individual cities may also have
programs. For example, the city of Austin,
TX offers down payment assistance for qualified applicants in the
form of a 0 percent deferred loan.
Hope you're in good graces with
your family, because they might just give you the funds you need to buy your
home. "Parents can give up to $13,000 annually to their children without
having to pay gift taxes," said Money
Crashers. A family member or friend can also give you a loan, but you'll
have to "draw up specific repayment terms" to avoid tax issues. And,
there are documentation requirements and lender specifics with either option.
"If a parent, grandma or
whoever gives you the money, you need to fill out a gift letter, validate it
with a copy of the check and your deposit receipt into your bank account,"
said My Mortgage Insider.
5. USDA Mortgages
Getting down payment assistance
from an agency that exists to support and promote rural areas might not sound
relevant if you're looking to buy in the ‘burbs, but the USDA offers a
zero-down loan known as a Section 502 mortgage that is "not just a ‘rural
loan' — it's available to buyers in suburban neighborhoods, too," said The
Mortgage Reports. "The USDA's goal is to reach ‘low-to-moderate income homebuyers,'
wherever they may be. College towns including Christiansburg, Virginia; State
College, Pennsylvania; and even suburbs of Columbus, Ohio meet USDA eligibility
standards. So do the less-populated suburbs of some major U.S. cities."
6. Friends and loved ones
If you have a birthday,
anniversary, or other special occasion coming up, forgo the expensive dinner
out, the birthday cake, and the new socks you don't need. Register instead on Down Payment Dreams, and
create a place where people can help you get the funds together.
7. Your IRA
Money you've already put away
could be the answer to your down payment conundrum. "Tax laws allow you to
use up to $10,000 in IRA funds as a down payment if
you've never owned a house," said Bankrate. "If you're married and
you both are first-time buyers, you each can pull from your retirement
accounts, meaning a potential $20,000 down payment."
There is no penalty for early
withdrawal, they added, "but you may owe tax on the money depending on the
type of IRA," so ask your tax advisor before pulling the trigger.
8. Your 401(k)
If you have a 401(k), you can
tap it to pull out funds for a down payment. But, you'll need to pay them back.
The 401(k) loan "typically allows a person to borrow up to 50 percent of
his or her account balance up to a maximum of $50,000 but requires it be repaid
within five years—though the repayment schedule may be extended if you're using
the money for a down payment on a home," said Forbes. "The loan doesn't have to be
approved by a bank, which means you can usually get your hands on the money
quickly and without a credit check. Plus, interest rates may be lower than on
standard bank loans."
9. VA loans
Are you a veteran or currently
serving the country? If so, you may be able to get a zero down payment loan
from the U.S. Department of Veteran Affairs (VA). The
VA offers a "basic entitlement" to "each eligible veteran"
of $36,000. "Lenders will generally loan up to 4 times a Veteran's
available entitlement without a down payment, provided the Veteran is income
and credit qualified and the property appraises for the asking price,"
said the VA.
10. Good ‘ole savings
You may have been trying to
save enough money to buy a house for years. But some smart strategies and
strict cutbacks can make a real difference. Trade your cable for Netflix. Take
your lunch instead of buying. Trade your gas-guzzler for a hybrid. You'll be surprised
how much money you can save. Click here to see
how more about how two different people saved $30,000 in a matter of months.
Still not where you need to be?
Check out Movoto for some more creative ideas for
saving money toward your down payment.
Written by Jaymi Naciri – To view the
original article click here