Ways To Come Up with a Down Payment
Down payments used to be minimal, depending on where you live it could be as low as 5%. However, due to the economic situation, banks now require higher down payments between 10% to 20%. This feels peculiar to home buyers who have already bought homes with little or no down payment, but there is no cause for worrying, this article will introduce you to 6 ways you can come up with your down payment.
#1. FHA Programs
State workers are eligible to apply for FHA some of the programs provided by FHA. If you are a teacher, a law enforcement officer, a firefighter or a medical technician, you are eligible for discounts on buying a home.
A program called Good Neighbor Next Door offers state workers 50% discounts off the home’s list price, to be qualified all you need to do is live in the house for three years.
#2. State Programs
If you are a new home owner and you are not a state worker to be eligible to apply for FHA programs, do not worry, there are other programs called state programs which make home ownership more affordable to lower income or moderate buyers. There are many state programs each targeting a particular set of people, lower income buyers, graduates etc.
#3. Retirement Plans
During the occasion of buying a home, it is acceptable that you withdraw money from your retirement plan. The withdrawal could be as much as $10,000 from your IRA, penalty free. On the other hand, taking the money out of your 401(k) is a bit messier. You are allowed to make a hardship withdrawal, but a 10% tax would be placed on the amount you withdraw, plus a 10% penalty.
#4. Extra Income
Try to earn some extra money and save it up for your home down payment. It is up to you to do whatever you want to make some extra cash, either you take a part-time job, work overtime, or do odd jobs around your neighborhood (such as painting, pet sitting or landscaping).
#5. Gifts
Gifts are great because they are free money, and you never have to pay back. If you are struggling with your down payment, now is the time to hit up your relatives and rich friends to contribute towards your down payment and make you realize your dream of purchasing your own home.
#6. Loans
If you fail to scoop money out of your relatives or rich friends as a gift, ask them to loan it to you. You can make this official by writing a contract agreeing to pay them back after some time. This is the best type of loan because your family member or friends would not require to run your credit before they lend you, and you could be lucky and get the loan interest free.
