Check out the following 7 options for funding your down payment on a new home…
1. Down Payment Assistance Programs
Many states and local cities have down payment assistance programs that offer loans or grants for first time home buyers and veterans. Take a look and you may be able to combine these programs with an FHA loan for 100% mortgage financing.
2. Crowdfunding Sites
There are now numerous websites and internet platforms which connect borrowers with all types of credit scores with private lenders. Post your story and see what offers you get.
3. Borrow against Your 401k
The odds are your 401k isn’t performing that well and buying at the bottom of the real estate market in a good area could reap a better return than your retirement funds are achieving right now. Borrowing versus cashing out minimizes tax liability.
4. Get Personal Loan
While you need to be careful about borrowing too much it may make sense to take out a personal loan, secured or unsecured to help with your down payment. If you are paying 5% interest and you are in an area where home values are rising 10% it’s a good trade-off.
5. Mom & Dad
This is one of the few occasions when it’s actually OK to ask family if they’ll help out. Show you’ve done your homework on mortgages and have been responsible with your credit. Demonstrate who great the opportunity is and offer to pay them back with interest.
6. Get a Freelance Gig
If earning more money and saving for your down payment is the best option but you already have a full time job you could pick up a few freelance gigs on the side through sites like oDesk and put that cash aside just for buying a home. If it turns out to be steady work you may be able to count that as income on your mortgage application and qualify for better terms too.
7. Use Your Tax Refund
Most people splurge their tax refunds on junk or worse, for taking on even more bad debt. Why not use yours for buying a home?
