Looking to purchase a house right now? Here are some ways to quickly get a down payment for Raleigh/Durham real estate.
Low Down Payment Mortgages
There are a few programs to help first time home buyers that require very little down payment in regards to the total purchase price. This option will get you to your down payment goal a lot faster than the traditional mortgages. There are VA loans, backed by the Department of Veterans Affairs, and USDA loans, backed by the Department of Agriculture, which may not require any money down on a mortgage at all as long as you meet certain criteria. FHA loans, backed by the Federal Housing Administration, only require at least 3.5% down. Conventional loans, backed by private companies, may only require at least 3% down, but those loans usually rely on good credit. These low down payment options might be a great way to quickly get into a house and start building equity. A big drawback of this strategy is that the lower the down payment is, the more interest you are likely to pay over time which costs you more money in the long run. Additionally, some of these low down payment programs have extra fees associated with them such as large origination fees that are rolled into the payments or required mortgage insurance.
State and Local Down Payment Assistance
Many states have assistance programs to fund down payments for Raleigh/Durham real estate sponsored by government agencies, nonprofits, foundations, and even some employers. These programs can have a varying degree of geographical focus which can range from the whole state, city, neighborhood, maybe even down to one house. The assistance may come as a grant or a no-interest forgivable loan. These programs are usually partnered with competitive interest rates or tax breaks. Sometimes, homeownership classes are required. One drawback of this strategy is that there might be a purchase price or income restrictions.
Down Payment Gifts or Loans From Family or Friends
One of the most accessible sources of down payments for real estate are gifts or loans from family members or friends. Make sure you write down your payback agreement if you agree to a loan, and pay it back! You do not want to ruin personal relationships over your house! One drawback to using a gift as a down payment for real estate is that it’s not quite as simple as it seems. The person who gave you the money must verify they gave the gift and also prove that they were able to make the gift. If you do have to rely on gifts for the down payment of a house, you might not be prepared for the full cost of homeownership and are statistically likely to default on the loan. Another drawback is if your down payment for Raleigh/Durham real estate is a personal loan, that loan must also be calculated into your income to debt ratio to make sure you can still qualify for the loan.
Crowdfunding your Down Payment
There are a few sites that enable you to crowdfund your down payment. There are some sites that work like a registry where contributions to your down payment are funneled into your bank account. This scenario works well for situations like engaged couples or newlyweds. Other sites require you to become prequalified for a loan before they will allow you to raise money for your down payment for Raleigh/Durham real estate. Possible drawbacks to this strategy are credit card processing or other fees and the potential inability to shop around for lenders.
Retirement Account Withdrawals or Loans
Depending on your retirement plan, you may be able to withdraw funds or request a loan from your balance for your down payment for Raleigh/Durham real estate, but this strategy should be used with discretion. There are a lot of fees surrounding early withdrawal from retirement accounts. Make sure you consult with your account director before choosing this strategy.