5 Surprising Ways to Save for a Down Payment
March 25, 2016
Saving for a down payment does not have to be an impossible feat for your would-be buyers. HouseLogic recently featured several resourceful ideas to help them save up for a down payment on a home.
Maybe instead of a traditional wedding registry, your buyers use a site geared to saving up for their future home. Sites like Feather the Nest and Hatch My House can be sites used to raise funds for a down payment. Hatch My House says it’s helped raise more than $2 million in down payments on home purchases.
Read more: 70% Unaware of Down-Payment Assistance
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: “5 Ways You Didn’t Know You Could Save for a Down Payment,” HouseLogic (Oct. 26, 2015)
Updated: June 22, 2018