One of the biggest barriers to homeownership is not having enough cash to put down on a house at closing. While you might think you won’t be able to buy a home if your savings account is looking a bit lean, there are some creative ways you can make it work. From specific loan programs to family gifts and more, the odds are good that you will find a way to make homeownership a reality.
VA Loan Qualification
Active duty service-members, veterans and their family members are eligible for a VA loan, which is backed by the Department of Veterans Affairs. This allows qualifying buyers to purchase a home with no down payment and little-to-no closing costs. Unlike other loan programs that may require a down payment, the VA loan program doesn’t have a minimum down payment requirement. The VA Guarantee Fee replaces the requirement for mortgage insurance, so this is an all-around great way to purchase a home for those who qualify.
FHA Loan Qualification
The FHA loan is a popular option that allows buyers to put as little as 3.5% down on a new home, which can be given in the form of a financial gift from family or from a qualified non-profit or government agency. Sellers can also contribute closing costs up to 6% of the sales price of the home.
The great thing about FHA loans is there are lower down payment requirements and less restrictive qualifying criteria, making this a great option for all potential home-buyers. However, just be aware that you’ll be required to pay a mortgage insurance premium with this loan program, regardless of your down payment.
Opt For A Homebuyer Assistance Program
if this is your first time buying a home, there are so many resources available to help you navigate these unfamiliar waters. Fortunately, there are also some programs available at both the local and national level that offer financial assistance to new homebuyers and in some cases, to previous homeowners as well. It could be worth looking into local programs, state programs, Non-profits, etc.
USDA Loan Qualification
Another option available to borrowers who qualify, with a zero down payment requirement, is the USDA loan program, otherwise known as a rural development loan. Some eligible areas are surprisingly quite suburban, so don’t discount this loan program until you’ve checked to see if the property qualifies.
Have Seller Pay Closing Costs
Having your closing costs paid by the seller depends on a number of factors, including the current real estate market in your area. In a buyer’s market, where the supply of homes exceeds demand, it may not be unreasonable to ask a seller to pay some or all closing costs.
However, in a seller’s market, where demand for homes exceeds the supply, the likelihood of a seller contributing toward your closing costs may be slim. It’s certainly worth inquiring since many sellers want to move quickly and find it worthwhile to negotiate in order to ensure the sale closes in a timely manner.
