How to get your Hands on Money for Your Down Payment

down paymentMany years ago (like six) you didn’t need much of a down payment to purchase a home in the Cedar Rapids area. However, in light of what has happened over the last six years, times, they are a changin’.

The desired down payment today is 20%. If you qualify for an FHA, Rural Development, VA or other loan program, down payments range in the single digits.

Iowa may have a payment assistant program:

Iowa Finance Authority
Cedar Rapids First – Time Buyer Program

If you or your home doesn’t qualify and there’s not a mattress stuffed with cash, large piggy bank or enough in savings, where do you come up with the down payment?

Your rich Uncle – Uncle Sam, that is. You’re going to receive a tax refund. Save that and put towards your down payment.

Ask Mom & Dad ….. No, really! Tax laws allow your parents to GIFT you a certain amount of money each year. According to the National Realtor Association, about ¼ of all first-time home buyers actually receive assistance from relatives (i.e. Mom and Dad). Best to ask their or your CPA to find out the details. If Mom and Dad LOAN you the money for your down payment, lenders may see that as an unsecured loan – as even more debt and it may disqualify you from your loan. It’s best to make the money for the down payment a gift.

Start SAVING!! Take some from each paycheck and put it away – don’t touch it! Over the course of a year if you save $100/week, you’d have $5,200 saved up within 12 months!! The secret? DON’T TOUCH IT!!

Sell things!! Ebay, Craigslist or a garage sale. If you haven’t used it in the year, you won’t want to move it to your new home!!

Seller Pays closing. But check with your loan officer before you do to make sure what guidelines you have to follow. Let’s say you want to purchase an $80,000 home and your closing costs are $3,200, if you offered $83,200 with Seller pays closing, then you have a down payment.

Government Programs. And you can either call me or your loan officer to find out what you qualify for.

Work a Second job. Even a short-term job in the evenings will give you enough in a short time for that down payment.

As your boss for a Raise!

Consider 100% financing – lenders are starting to do that if you have excellent credit.

I don’t recommend tapping into your retirement funds, like your 401K, but if you do, check with your CPA for the current regulations. Line up your down payment before you start looking for your home. While you’re qualifying for your loan, you will have a better idea of how much you’ll need.

Call me at (319) 480-5262. I will be able to give ideas that will make your buying process a whole lot easier!

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