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Three Ways to Find a Down Payment

Ask many homeowners about the hardest part of their homebuying process and they’ll tell you it was saving for the down payment.  In fact, according to the National Association of Realtors and RealtyTrac, it takes first-time homebuyers an average of 12.5 years to amass enough cash to put down 20 percent upfront on their investment.

Sure, you can buy a home with a smaller down payment, such as 3.5 percent with FHA financing, but you’ll usually pay a penalty in the form of higher interest rates and even costly private mortgage insurance.  You might want to consider these alternative sources of down payment funds instead.

  1. Down Payment Assistance Programs.Start your search for programs available to you at, a website that connects homebuyers with down payment assistance opportunities.  Other sources of information include your mortgage lender, real estate agent, and you state’s housing authority website.  Keep in mind, not all lenders participate in all down payment assistance programs.

  2. Gifts from Your Family and Friends.Many lenders will allow you to cover at least a portion of your down payment with cash gifts from family and friends.  As of 2014, conventional mortgages often allow you to use gift funds for your entire down payment, as long as you’re putting at least 20 percent down towards the purchase price.  Less than that and there may be a limit on how much can come from gifts.  The specifics depend on the loan type, so talk to your lender.

  3. Employer -Sponsored Programs.  Some employers include mortgage assistance programs in the benefits package they offer their workers.  Ask your company’s human resources department about options you might have, from down payment assistance to low-interest mortgages.  If you’re currently looking for a new job, consider asking for down payment assistance when negotiating salary.

Contact us for any questions you may have.  We’ve got great lenders we work with who are happy to help with the smallest or biggest issues you may have.

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