The down payment for a house could be one of the biggest obstacles a homebuyer faces. Luckily, there are plenty of ways to save for a down payment, that will make the home buying process a little less stressful. Here are four options that could make homeownership a reality:
- Renting to own: Leasing-to-own typically requires a smaller down payment called option money. Also, a portion of your monthly rent payment can go toward your purchase of the property. Pay special attention to the written agreement.
- Co-buying: Another option is to buy a home with a family member or friend. It'll allow you to split the down payment and the mortgage payment. But co-buying does come with an important decision: how the title will be held.
- Pulling from an IRA: You, your spouse, parents or grandparents could withdraw up to $10,000 from a traditional IRA to put toward a home. Although it's categorized as a first-time homebuyer exemption, anyone who hasn't owned a principal residence in the past two years may qualify. Note: Some differences exist when withdrawing from a Roth IRA.
- Receiving a gift: If you have family members willing to help you out, you can get what's called "gift money" for your down payment. The amount of gift money you can use depends on the loan type. And you'll likely need signed documents stating that the money is indeed a gift, not a loan or anything earning interest.
There are also low down payment options like HomeReady, HomeOne, Home Possible and FHA loans, as well as down payment assistance programs and grants. Want to learn more, or know someone who's looking to buy a home? Get in touch today.