Listed below are several options:
Down payment funding
alternatives
For many Utah County buyers, especially first-time home
buyers, saving up the funds for the down payment can be
a seemingly insurmountable hurdle to home ownership.
This doesn’t have to be the case.
Using a gift for your down
payment
One way to fund a down payment is by using a
gift. For many loan programs, a gift may be used for a
portion or all of the required down payment. Money
given as a gift for a down payment can’t come from just
anyone. Family members are the usual source.
Sometimes an employer may also be acceptable. A
lender can help you determine which loan programs accept
gift funds for down payments and who may give the gift.
This information must be disclosed to the bank lending
the money.
Seller Concessions
Many times it is more advantageous to negotiate with the
seller to pay for closing costs. This option will
easily allow you to roll closing costs into a loan with
minimal hassle. Most residential lenders will
allow up to 3% (and some as much as 6%) of the purchase
price to be paid toward closing costs by the seller.
FHA Loans
The Federal Housing Administration (FHA), which is part
of the U.S. Department of Housing and Urban Development
(HUD) plays a significant role in helping low to
moderate income families qualify for mortgages. FHA
assists first-time home buyers and others who would not
qualify for a conventional loan, by providing mortgage
insurance to private lenders. Interest rates for an FHA
loan are usually the going market rate, while the down
payment requirements for an FHA loan are lower than
conventional loans. The required down payment can be as
low as 3%, and the closing costs can be included in the
mortgage amount.
VA Loans
VA Loans are guaranteed by the U.S. Department of
Veterans Affairs. Service persons and veterans can
qualify for a VA Loan, which usually offers a
competitive fixed interest rate, no down payment, and
limited closing costs. While the VA does not issue the
loans, it does issue a certificate of eligibility
required to apply for a VA loan.
107% Purchase
In some cases the best option is to use what we call a
103% or 107% purchase. In these particular cases,
you are actually borrowing more than the purchase price,
up to an additional 7% of the purchase amount so as to
include all of your closing costs. This must be
disclosed in writing to the bank lending the money.
If you would like assistance in finding a lender contact
Team Teasdale.