Down Payment Money - For most first-time homebuyers, that is probably the biggest hurdle they face in their quest to purchase a home. These days, one can easily find a loan program that allows the buyer to put down only 10% of the purchase price. Even at 10% down, the homebuyer will have to come up with $25,000 for a median-priced home in Fresno, CA! That is a lot of money for the average person. How does one come up with the down payment?

Here are some ideas:

Savings
This is obvious but if you're serious about realizing the American Dream, you'll have to save, save, save. Track your spending for a month and you might be surprised at how much extra you can save.

Research 1st-time Homebuyers Assistance Programs
Check with lenders regarding down payment assistance programs available for first-time homebuyers. There are state and federal loan programs designed to assist first-time homeowners, e.g. Federal Housing Administration (FHA), U.S. Department of Veterans Affairs (VA), California Housing Finance Agency (CalHFA) and California Department of Veterans Affairs (Cal-Vet). Your city and county might have some financing programs as well.

Borrow from parents, siblings, relative or friend
Can you possibly borrow part of your down payment money from any of them? Have you asked?

Borrow from your 401K plan
Some 401K plans allow you to borrow against them. Check with your employer or plan administrator for more details.

Tap into your IRA
First-time homebuyers can withdraw up to $10,000 without penalty from an IRA/Rollover IRA to use as down payment money to purchase a primary residence.

No Money Down loan programs
What about no money down loan programs? Yes, you've seen the commercials on late-night TV.”Buy a house with Zero Down!”

There are these types of programs available but be prepared to pay higher interest and loan fees. How much higher depends on the lender and your credit score.

Even with no money down programs, you will most likely still need to come up with some money for closing costs and any cash reserves required by the lender.

It is also important to remember that in addition to the down payment, the homebuyer must be able to afford the monthly mortgage payment. The lower the down payment, the higher the loan amount and the higher the mortgage payment.


To learn more about downpayments, visit Empire Real Estate - Downpayment Money, and No Money Down Loans .
This article may be reprinted only if credit is given and all links are kept intact.
Copyright©2005 Empire Real Estate Group, Inc.


About the Author
Andre McFayden is Vice-President of Empire Real Estate Group, Inc. in Fresno, CA
www.empirefresno.com