If you’re hoping to buy a home but fear you will never come up with the needed down payment, take heart.
Many programs do not require large down payments as long as they are convinced that you can repay the mortgage on your current salary. For instance, the FHA offers a 3 ½ percent down payment program and the Veteran’s Administration (VA) has zero down programs in place.
With the value of homeownership so deeply entrenched in the American psyche, it’s hard to imagine that modern mortgages did not become a “thing” until 1934. In an effort to pull the country out of the Great Depression, the Federal Housing Administration (FHA) began to offer loans to people who had no way of paying cash for their homes. At that time a buyer was required to provide a 50 percent down payment and the mortgage was spread out over three to five years. At the end of the mortgage period a balloon payment was due. It will come as no surprise that only four out of 10 households owned their own home, at least until lending became a little less Draconian.
During your parent’s and grandparent’s time a homebuyer was expected to provide at least 20 percent down. As property values began to rise and homes moved from “a roof over their heads” to potential investment vehicles, it became difficult to keep up with home inflation enough to come up with that dreaded 20 percent. And while it’s been years since financial institutions actually required 20 percent down, the number has stuck in the minds of many a potential homebuyer.
In addition, many cities, counties and states offer down payment assistance programs and grants to help renters become homeowners. Finding out which programs are available in your area is as easy as asking your Seacoast Bank mortgage loan officer.
In the meantime, you will need money to make your homeownership dream come true. If, like many people, you’re living paycheck to paycheck and believe there is no way to put money aside, you may be surprised by some of the ways you can cut back (at least long enough to save for a down payment).
Although no one enjoys depriving themselves of the little luxuries in life, home ownership may just be worth the sacrifice.
If owning a home is important to you, consider the ways you can cut back on life’s niceties long enough to hand that down payment to your lender. While there may be things on this list you absolutely refuse to cut from your life, add up the potential savings from those you can live without to get a sense of what your savings account will look like in one year.
What are you saving for? A home? Learn about Seacoast Bank's mortgage loan solutions.