This competitive real estate market has some buyers scrambling to come up with a substantial down payment, but buyers may not be aware of other options. In fact, some of the biggest misconceptions regarding the homebuying process are related to down payments. In a recent article the National Association of Realtors debunks some of the myths surrounding what many people consider the greatest barrier to homeownership:
- You need a 10-20% down payment. This simply isn’t true. In fact, roughly 60 % of homebuyers financed their purchase using a 6%–or less—down payment.
- Low down payment programs are only for first-time buyers. Low down payment and down payment assistance programs are available to many qualified homebuyers, even those buying their second, third or tenth home. Homeowners should review program requirements before counting themselves out!
- It’s difficult to qualify for down payment assistance. There are assistance programs available for homebuyers with all levels of income, current renters or owners, and buyers with a diversity of credit scores. Talk with your lender or real estate agent about programs in your area.
- You can’t use gifts, grants or loans for your down payment. This depends on your lender, but many allow buyers to use money that has been gifted to them (whether through family or grant programs) to pay for some, if not all, of the down payment.
The best first step in the home buying process is to talk to your lending expert. She should be able to inform you about creative financing solutions, including down payment assistance programs. If you’d like referrals for qualified lending experts, contact Sharon Hales, Realtor at 818-652-7650 or visit SharonHales.com.