May 14, 2015

4 Ways to Bridge the Cash Gap

Spring Homebuying Series - Bridge the Cash Gap

You're ready to buy a home but missing a little cash to meet your down payment requirements or to pay for closing costs? Here are 4 ways to bridge that gap:

Gift funds. Money given to you by relatives or close friends to help you make your down payment. Borrowers must typically contribute 5% of the down payment from their own funds, however, some mortgages – like Freddie Mac's Home Possible Advantage – gift funds can be used to make the entire down payment.

Grants. Funds that you do not need to pay back as long as you own and live in your home for a specific period of time.

Second mortgages. The most common down payment source, these have low or no interest rates and the payments are deferred over a specific time period.

Tax credits. Certain states and local governments, including Housing Finance Agencies, issue mortgage credit certificates which reduce the amount of income tax you pay, thus giving you more available income upfront to make your down payment or pay for closing costs.

There are hundreds of millions of dollars available for down payment assistance. A great place to start is right where you live. Many state, county, and city governments provide financial assistance for people in their communities who are well qualified and ready for homeownership. Get started.

Not sure how much you'll need? Check out our calculators.

Read other posts in our Spring Homebuying series.

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