Homebuyer Tips: Down-Payment Funds

Homebuyer Tips

From Catherine Mitchell, The Intentional Realtor®™,

Down payment funds can come from savings, a gift, or your tax refund

Most first time homebuyers say that their biggest challenge when trying to purchase a home is saving money for a down payment. Not to worry, when it comes to funds for a down payment, your personal savings aren’t your only resources.  Instead, your down payment could come in the form of a tax refund or as gift from a family member. 

Income

Before a down payment from your savings, cash in the form of a gift from a family member, or funds from a tax refund, the potential homebuyer must first show adequate income to qualify for a mortgage loan. 

Most lenders want to see a strong income history, career trajectory, and a good credit score in order to qualify.  These requirements are called compensating factors and are very important to the lender in order to receive a loan. Once those factors are met then it’s time to talk about the down payment.

Down payment 

A down payment on a loan is required to be approved for a mortgage. There are a myriad of mortgage programs available.  The Conventional 97 Mortgage loan and the Home Ready Mortgage loan require 3% down; FHA programs require 3.5% down; and with a 20% down payment homebuyers can qualify for the lowest mortgage rates offered by their lender.  

There are also different home buyer programs that offer down payment assistance.  Your lender should be very well educated on all the programs available and will counsel you about the best program to meet your needs.  

Gift

You can also receive a gift from a relative to help cover your down payment.  Many homebuyers receive cash down payment gifts for the purchase of a home.  In fact first time homebuyers are the most likely to receive a cash gift.  A gift won’t affect a potential homebuyer’s interest rate. Although mortgage lenders will allow gifts from relatives on a down payment for an owner occupied residence, they will not for an investment property. 

Connect with Catherine:

As The Intentional Realtor®™, my goal is to help you achieve the reality of homeownership.  I’ll do my best to advise you on the loan process and to help you find the perfect home that’s right for you, which is why securing a good Realtor® is in your best interest to help you get the home of your dreams.   

For this and more real estate needs by The Intentional Realtor®™, connect with me, Catherine Mitchell, at (704) 898-0605 http://www.catherinemitchellrealty.com/

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