How can I get help with a downpayment for a house?

Making a large down payment on a home may be ideal in many cases. After all, the size of your down payment can affect your monthly loan payment, your available equity and several other factors. Many home buyers lack the funds available to make a large down payment. Even if you have the money available, you may not want to place so much money into your home. There are several down payment assistance options that may work well for your situation if you want to make a small down payment.

Choose the Right Loan Program
Each home loan program that you may be reviewing could have a different down payment requirement. FHA loans typically have the most lenient requirements in this area. An alternative may be to structure a second lien behind your first lien. One type of loan that this may be possible with is a conventional loan. Remember that the loan amount, your credit rating and several other factors may dictate which loan programs are available for you to consider.

Consider a Gift
You could finance the majority of your sales price through a high loan-to-value mortgage, or you could use a gift of funds as part of your down payment. FHA loans and some other programs allow you to use a gift of funds from a close family member as part of your down payment. The relative will typically need to sign a letter saying that he or she does not expect to receive any of the money back and that it is a gift rather than a personal loan.

Get a Seller Contribution for Closing Costs
Homebuyers who are interested in paying the least amount of money at closing should be aware that the down payment is only one financial requirement that they are responsible for. Closing costs may be as high as three percent or more of the sales price, and this could be a substantial amount of money. Many mortgage loan programs allow the seller to pay for some or all of the closing costs. While this does not reduce the down payment funds that you are responsible for at closing, it does reduce your out-of-pocket expenses.

One of the most important factors that potential home buyers will consider before deciding that they are ready to buy a new home relates to the money they have available for a down payment. There are ways to obtain some of the money that you may need to pay upfront for your real estate purchase, and these solutions could help you to afford to buy a home much faster than you otherwise would be able to. Remember that you may be able to structure financing with two or more of these ideas rolled together.