Down payment funding alternatives

For many buyers, especially first-time buyers, saving up the funds for the down payment can be a seemingly insurmountable hurdle to home ownership. This doesn’t have to be the case. As your mortgage consultant, I can help you find creative ways to come up with your down payment.

Using a gift for your down payment
One way to fund a down payment is by using a gift. For many loan programs, a gift may be used for a portion or all of the required down payment.  Money given as a gift for a down payment can’t come from anyone.  Family members are the usual source.  And sometimes an employer may also be acceptable.   If this is an option open to you, please let me know.  I can help you determine which loan programs accept gift funds for down payments and who may give the gift.   I’ll also supply the gift letter that the person giving the gift is required to sign.  The gift letter states that the funds are a gift and will not be paid back.

Down payment assistance charities

If a willing and able family member is not available, buyers now have the option of turning to a non-profit for down payment assistance.  In California 1st Time Home Buyers have available funds through CalHFA.  CalHFA offers, downpayment assistance through the CHDAP program or through the Teacher's Extra Credit Programs.  Both of these have been very populare with my home buyers.  ** Due to the California Budget crisis these funds ahve bee temporarily suspended.  If you would like to be alerted when they come available send an e mail using the attached form.

Caution should be taken when searching for a down payment assistance charity (aka down payment assistance program).  There are many reputable organizations providing buyer assistance, but there are dubious ones as well. 

Generally, a down payment assistance charity will give the buyer money for a down payment that does not have to be repaid.  The seller will contribute an equal sum to the charity at closing or soon after.            The seller will also pay an administration fee to the charity.  Sounds good, right?  Only problem is that ecently congress has outlawed continued use of Seller funded down payment assistance programs including Nehemiah.

Zero down mortgage loans

Service persons and veterans can qualify for a VA Loan that requires no down payment.  VA Loans are guaranteed by the U.S. Department of Veterans Affairs.  In addition to no down payment, these loans usually offer a competitive fixed interest rate and limited closing costs.  While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.  Fannie Mae and Freddie Mac the largest conventional issuers for home loans also provide for 100% financing for first time home buyers, some programs have income limitations.  I will ask you to provide the appropriate information to determine which programs are for you.  In some cases buyers may also qualify for secondary financing without monthly payments to provide funds for closing costs. 

  Let me help you find the down payment and mortgage alternative that’s right for you.