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When deciding how much money you can put down on a house, you have a few options. These options include cash on hand, savings, and gifts. There are also a few Government-sponsored programs you can take advantage of. Regardless of what you decide, make sure you create a budget for your down payment so you’ll know how much wiggle room you have.
Savings
Saving for a home is an essential part of the process. While some houses can be purchased for a small down payment, many others require much more money. There are a few tips to help you save as much as possible. The first tip is to create a budget. Budgeting will help you direct your money towards saving for the down payment.
One of the biggest mistakes first-time buyers make is underestimating how much money they’ll need to buy a house. The down payment alone can cost you anywhere from five to twenty percent of the purchase price. You’ll also need to cover closing costs and move expenses, which can total thousands of dollars. In order to buy a house with a reasonable down payment, it’s important to find ways to save money in the months before closing.
Cash on hand
To buy a house, you need at least enough cash to cover up-front fees, including a down payment. Most lenders will require that you have three to six months’ worth of mortgage payments in cash. The amount of money you need to save will vary depending on the price of the house and the mortgage loan. Typically, you’ll need at least $2,500 in cash to close on the deal. However, closing costs can sneak up on you!
Before buying a house with cash, it’s important to do some research about homes in the area that you want to live. You should also talk to a real estate agent and view some properties in person. After you’ve done your research, decide how much money you want to spend on the house. Be sure to factor in taxes and other fees that you’ll have to pay, as well. Using cash to buy a house is a faster and more sure way to own a house, but it comes with a few drawbacks.
Gifts
When buying a house, one of the first questions you’ll have is, “How much money do I need to put down?” Fortunately, there are a number of ways you can get the money you need. Many banks allow you to automatically transfer funds from your checking account to your savings account, so you don’t have to worry about making the transaction manually.
Government-sponsored programs
If you’re looking to buy a home but don’t have enough cash to put down on the entire purchase, there are a few options available to you. The first is a Government-sponsored loan. These loans are given by private lenders or government-sponsored lending enterprises like Fannie Mae and Freddie Mac. These loans help make home purchases more affordable by offering low-down payment programs.
Moreover, these programs are designed to help first-time homebuyers purchase a home. The requirements to qualify are fairly easy to meet. The only limitation is that you must earn 80% or less than the median income in the area. The program also requires you to pay mortgage insurance, which is refundable when you reach 20% equity in the home.
Government-sponsored programs with smaller down payments
If you are thinking about purchasing a home, but you can’t afford the full down payment, there are various government-sponsored programs that help you make the down payment. These programs can range in amount from zero to as high as 20% of the price of the home. These programs are offered by government agencies, community organizations, and local lenders.
One of the most popular programs is the Fannie Mae home loan, which requires a minimum 3.5% down payment. This equates to around $10,500 for a $300,000 home, excluding any closing costs and repairs. Other government-sponsored programs include the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association.
