Traditional mortgages will usually require that borrowers put down at least 10 percent of the home’s sale price, or 20 percent if they want to avoid paying PMI (Private Mortgage Insurance). On top of the down payment, there are also closing costs to budget for. With all of the out-of-pocket money that is involved with the purchase of a home, it can be discouraging for many. If you’ve been saving to buy a home and you don’t quite have the 10 percent you need for your down payment, you might have other options. The following tips can help you buy a home if your down payment is a bit smaller than you need it to be:
Explore different mortgage options
Although a traditional mortgage might require a 10 percent down payment, there are other loan options that don’t require as much, or may not even require a down payment. FHA loans and VA mortgages, for example, have more relaxed down payment requirements, but not everyone will qualify for these types of mortgages. Speak with a lender to learn more about the different types of mortgages you might be eligible for if you’re looking for lower down payment requirements.
Lower your housing budget
An easy way to get around a smaller down payment is to lower your housing budget. If you have a housing budget of $150,000, for example, you’ll need $15,000 for your down payment if you’re taking out a traditional mortgage. If you have about $10,000 saved up, consider lowering your housing budget and searching for homes that are priced around $100,000. It may not be the dream home or exactly what you wanted, but it could be what makes homeownership a possibility, and you might still find something you love after lowering your housing budget.
Wait it out
If lowering your housing budget isn’t an option and you don’t have what you need for your down payment, you could just wait it out. It could be difficult to do, especially if it means renewing your apartment lease another year. But buying a home is a big purchase and one that you can’t rush. You want to make sure that you end up in a home you’re happy with, and if it means putting it off and saving up more money, it could be well worth the wait.
Use other sources
If you’ve decided to wait it out and save up what you need to buy your dream home, you might be trying to figure out how you can speed up the process. If saving money from your regular paychecks isn’t helping much, explore your other options. For example, if you’re receiving a tax refund, put that money towards your down payment. If you have stocks, bonds, or a retirement fund, you may also be able to access some or all of that money and use it towards your home purchase.
Contact Peachtree Financial Solutions
Is it your goal to become a homeowner, but you need cash to make it happen? Even with a mortgage, you’ll still need to consider other expenses, such as your closing costs and down payment. Peachtree Financial Solutions may be able to help get you your money sooner if you’re receiving long-term payments from an annuity or structured settlement. You may have the option of receiving your cash in a lump sum by selling some or all of your future payments. To learn more about selling future payments to Peachtree and receiving a lump sum of money, contact us today.
Nothing above is meant to provide financial, tax, or legal advice. You should meet with appropriate professionals for such services.