Four Ways To Make Your First Home’s Down Payment More Affordable
Do you want to own a home in Utah, but feel like the down payment will be a barrier you can’t overcome? Don’t despair! There are more options for affording that down payment than you might realize!
Here are just a few of the ways you can put homeownership within reach with first time home buyer grants and more.
Four Ways To Afford Your First Home’s Down Payment
1 – Look for low-interest loans
Forget the “twenty percent down” myth. That’s ancient history. There are lots of mortgages out there with far lower mandatory down payments, such as loans from the Federal Housing Administration (FHA) which go as low as 3.5%. If you happen to be an armed service veteran, the VA even offers zero-percent-down mortgages for qualified vets.
2 – Use gifts to help you afford the payment
Did you know that approximately 25% of first-time homebuyers between the ages of 21 and 38 used a gift from friends or family to help pay for their mortgage? It’s actually quite common. Now, these people can’t simply hand you the money – there will be paperwork and bureaucracy to be satisfied – but it’s absolutely an option on the table.
Also, a number of crowdfunding sites have begun to appear, specifically for helping people pay for home loans. These can allow an even wider circle of acquaintances, such as social media followers, to pitch in. However, be very aware of the fees these sites charge! Sometimes they can cost more than they’re worth.
3 – Pull money from a retirement account
Have you been working a steady job for long enough that you have an established retirement account? If so, this could potentially be a source of funding for your home’s down payment. However, there may be penalties attached. For example, there will be a 10% tax penalty (plus income tax) if you withdraw money from your 401(k) early. On the other hand, traditional IRAs and Roth IRAs both have stipulations that allow penalty-free withdrawals for home purchases in some situations.
4 – Apply for first time homeowner grants in Utah
Non-profit organizations – such as Home Savings Fund – exist specifically to help younger people afford their first home. These will have some stipulations but if you qualify, you could get no-strings-attached grants worth thousands of dollars towards your down payment.
If you’re struggling to afford your first home, Home Savings Fund can help! Contact us to learn all the details.