Where to Look for Help on Getting the Right Down Payment for Your Future Home

Where to Look for Help on Getting the Right Down Payment for Your Future Home
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    The magic number for a home down payment is 20%.

    But coming up with a 20% down payment can be difficult when you don't know exactly how much the home will cost until you find it.


And even if you set your budget and calculate a down payment based on that, finding the cash can still be hard when you’re trying to pay rent and other bills. You might need to get a little creative or try routes you haven’t already considered.

Look Into Government Programs

There are many federal and state government programs that offer assistance to homebuyers. Some of these eliminate or decrease the down payment required, while others offer financing assistance for it.

If you’ve ever been in the military (or your spouse has), you may be eligible for a VA loan, for example. The state of New Jersey offers a no-interest, forgivable loan of $10,000 in their down payment assistance program. Your state may offer something similar if you look for it.

Consider 100% Financing

If you’re a first time home buyer, you may be able to get 100% financing. There are many programs offering different forms of assistance to first time home buyers.

The requirements vary depending on the program, but generally you would need to have good or excellent credit and be able to provide information regarding your income, employment, and the purchase price of the home you want to buy.

Tap Into Your Retirement Funds

While you can’t tap into your IRA, if you have a 401(k), there are certain circumstances that would allow you to borrow from it specifically to buy a home. This can be a tricky situation to navigate so it’s a good idea to consult with an accountant before making this leap.

You may or may not have to pay taxes or pay a penalty and if you default on the loan, you’ll end up paying taxes on it.

Save Your Tax Refunds

If you get a tax refund each year, saving it can be a great way to get a chunk of money all at once. Depending on the size of your refund, you could have your down payment within three to five years.

If you don’t get a refund, but don’t feel disciplined enough to save on your own, you could increase your withholding (fill out a new W-4) and start getting a refund.

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Of course, a simpler alternative to this, if you have the discipline, is to open a savings account and make consistent deposits to it. It’s even better if you can find a savings account with a good interest rate.

Buying a home is exciting but the financing can be frustrating. If you know where to look and what to ask for, you’ll face a lot less frustration. You also might find that the path to homeownership is shorter than you think with one of these options.

Image Credit: help on getting the right down payment by envato.com

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