Ditch the 20%: 5 Surprising Paths to Homeownership

Bypass the Traditional 20% Down Payment Wisdom for These Innovative Approaches to Homeownership.

Purchasing your first home is a heartwarming endeavor, filled with pride and joy. However, the challenging aspect is gathering a substantial down payment, especially if you've been following the conventional advice of saving 20% of your home's price.

Discover five unconventional strategies to amass your down payment faster than you might expect.

Crowdfund Your Dream Home: Remember Kickstarter for funding creative projects? Apply the same concept to homeownership. Bid farewell to traditional wedding registries and kitchen appliances. Platforms like Feather the Nest allow you to crowdfund your down payment.

Ask Sellers for Assistance (Seriously!): Some motivated sellers may help with closing costs to expedite the deal. Fewer closing costs translate to more funds for your down payment. These are often termed "seller concessions." Work with your real estate agent to negotiate concessions, potentially up to 2% of the total sales price, reducing your closing expenses.

Explore Government Assistance: The U.S. Department of Housing and Urban Development (HUD) provides various homeownership programs, offering down payment and closing cost aid, subject to specific income or location criteria. HUD lists resources by state to guide you. HUD also offers help tailored to professions, such as law enforcement, firefighters, teachers, and EMTs. They may qualify for a 50% discount in designated "revitalization areas." With an FHA-insured mortgage under this program, the down payment can be as low as $100, even covering closing costs.

Veterans can rely on VA guarantees through commercial lenders, often requiring no down payment or private mortgage insurance, while securing competitive interest rates. Additionally, some cities offer homeownership support, such as the HouseHartford Homebuyer Assistance Program.

Consult Your Employer: Employer Assisted Housing (EAH) initiatives link low- to moderate-income employees with down payment assistance from their employers. In Pennsylvania, employees of participating EAH employers can apply for interest-free loans, allowing 10 years for repayment. Washington University in St. Louis provides forgivable loans to eligible employees purchasing homes in specific city neighborhoods, amounting to 5% of the purchase price or $6,000 towards down payments or closing costs.

To explore these options, reach out to your company's human resources or benefits department.

Leverage Special Lender Programs: The most common misconception about home buying is the 20% down payment myth. However, there are countless programs that require just 3% or 3.5% down. For instance, FHA mortgages may require as little as 3.5% down. Be aware that you may need to cover upfront and monthly mortgage insurance payments. Some lenders offer more flexible programs, like TD Bank's 3% down payment program without mortgage insurance. Other regional banks may have their unique first-time buyer programs.

This journey isn't as daunting as it seems. Many unconventional paths can help you realize your dream of homeownership. All it takes is some research and a peek at those enticing home listings!