First Time Buyers, Pt 2

First Time Buyers, Pt 2 – Down Payments & Closing Cost 

Until you grow your own Cash Tree, here are some options to get a down payment and cash for closing. One or a combination of them can get you into a home:
 

1. Ask the seller to pay some of the closing cost. This was typical in a transaction a year ago and it is starting to be done again as the market softens. The seller can contribute up to 6% of the sales price under many loan programs. If they contributed 5% towards closing cost, then my buyer would not need any money to close. 
2. A gift from a relative. As homes values have been going up by 15% or more each year, your relatives probably have $50,000- $70,000 of new equity in their homes. Can they make a gift to you for your down payment? They can gift you up to $15,000 with no tax ramifications. If your new house appreciates at even 10% a year, that is $28,000 in equity you get from this gift in just one year. 
3. Build up your savings now to purchase in 6 months. Set a goal and a budget. Can you save $2000 a month for the next 6 months? Take on some extra gig work, work some overtime, only eat out once a month, see what you can sell? Most people can buckle down for a short amount of time to achieve a life altering goal. You just need a plan. 
4. There are other loan programs with smaller down payment and some with Zero (USDA) down. 
5. DPA – Down Payment Assistance can provide free money! $10,000 or more sometimes to use for down payments. And most of these loans do not ever have to be paid on and get fully forgiven after 5 years.   
6. Bring in a co-borrower. Can a parent or relative be a co-owner of the home? They can help with the down payment and help bring up low credit scores. In 2 years, you can re-finance and buy them out. 
7. Lease to own programs. A program like Divvy will mean a higher monthly payment but as little as 1% down. In this case about $6000 total including closing cost.  

These are a few basic options. This is why you need to work with a professional and their team to help you sort it all out.