Down payment funding alternatives

For many buyers, especially first-time buyers, saving up the funds for the down payment can be a seemingly insurmountable hurdle to home ownership. This doesn’t have to be the case. As your mortgage lender, we can help you find creative ways to come up with your down payment.

Using a gift for your down payment
One way to fund a down payment is by using a gift. For many loan programs, a gift may be used for a portion or all of the required down payment.  Money given as a gift for a down payment can’t just come from anyone.  Family members are the usual source.  And sometimes an employer may also be acceptable.   If this is an option open to you, please let us know.  We can help you determine which loan programs accept gift funds for down payments and who may give the gift.   We'll also supply the gift letter that the person giving the gift is required to sign.  The gift letter states that the funds are a gift and will not be paid back. Another item to be prepared for and to prepare the gifter with is that he or she will have to provide bank documents showing their ability to gift and the gift money clearing their account.

Down payment assistance charities

If a willing and able family member is not available, buyers now have the option of turning to a non-profit for down payment assistance. 

There are many reputable organizations providing buyer assistance, but there are dubious ones as well.  You may want to research the charity with the Home Gift Providers Association (HGPA) (http://www.downpaymentalliance.org/) before making a commitment.

Generally, a down payment assistance charity will give the buyer money for a down payment that does not have to be repaid.  The seller will contribute an equal sum to the charity at closing or soon after.  

This can be a good option for buyers who don’t have other means of securing a down payment.  However, you should be aware that this means of funding the down payment may inflate the selling price of the house.  You’ll want to consult with your real estate professional about how such a program may affect the selling price.

Here are some local Down Payment Assistance providers in Pierce County. Please visit each site to find out about their specific requirements.

Pierce County Down Payment Assistance http://www.co.pierce.wa.us/pc/abtus/ourorg/comsvcs/housing/html/1downpay.htm

City of Tacoma - HOME Down Payment Assistance Program Guidelines

http://www.cityoftacoma.org/Page.aspx?nid=454

Snohomish County - Self Help Home Ownership

http://www.housinghope.org/programs/homownershipOpportunities.html

Kitsap County Consolidated Housing Authority

http://www.kccha.com/servdpay.htm

Not all programs are accepted by all lenders. We have had great success in working with the programs mentioned above.

No down mortgage loans

Service persons and veterans can qualify for a VA Loan that requires no down payment.  VA Loans are guaranteed by the U.S. Department of Veterans Affairs.  In addition to no down payment, these loans usually offer competitive fixed interest rates and limited closing costs.  While the VA does not issue the loans, it does issue a certificate of eligibility required to apply for a VA loan.

USDA also offers loans with no down payment. Please visit http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do to find out if the property is within a rural qualifying area. Your mortgage advisor will assist you in qualifying with your income.