Acquiring the Down Payment for Your First Home

Saving for your first home can be a daunting task. From assessing your current spending habits to diving deep into your finances to determine exactly how much you can afford to spend, the saving process isn't always a pleasant one. But the end result, of course, is more than worth the sacrifice.

There are some underutilized options at the disposal of potential homeowners that can help you reach your goal. With that in mind, here are some tips to help make acquiring the down payment for your first home as easy and painless as possible.

Saving Tips

Before we look at some of the programs you might consider using to help with your down payment, let's talk about how you can effectively save for your first home.

Be Merciless

Digging through your finances is never a fun prospect. Many people avoid doing this at all, in fact, and instead just hope that their debt won't impact their home purchase as long as they keep making monthly payments. And while it's understandable to want to avoid facing the painful reality of debt, it's far too easy to fall further and further into debt and to miss the broader picture and outlying message of your credit report.

Instead of giving yourself a break and avoiding the sometimes-painful work of detailing each and every debt on your credit report, dig deep and be truthful with yourself. Take note of your debt totals as well as how much money you make a month and how much you're spending in minimum payments. Taking stock of your situation better enables you to plan the best strategy possible to save money for your down payment while simultaneously paying off debt as quickly as possible.

Be Smart with Payments

It's good to know how much debt you have and how much money you're spending each month in expenses, but it's equally important to create a smart plan to help with allocation of your funds. If you do have debt, that's okay - we've all been there. The important thing is that you craft a plan to pay it down as quickly and effectively as possible. A low debt-to-income ratio will not only make it easier to secure a desirable mortgage rate but will also increase the amount of money you can save every month. Don't neglect your non-debt-related expenses, either.

When you're saving for a down payment, "expendable income" becomes a thing of the past. Live as sparsely as possible and remember that the more you save, the lower your monthly payments will be and the more favorable your mortgage rate will be to you over the long-term, potentially saving you tens of thousands of dollars over the life of the loan.

Down Payment Assistance

There's no shame in taking advantage of assistance when it's available. And when it comes to first-time home buyers, there happen to be a few different options that could help take some of the burden out of the down payment.

Loans

It might seem counterintuitive to consider taking out a loan when we've just gone over the importance of getting rid of debt, but the truth is that there are some great loans available. VA loans, backed by the Department of Veterans Affairs, offer 0% down payment options for qualifying buyers. The same goes for USDA loans, which are backed by the Department of Agriculture.

If you don't qualify for a VA or USDA loan, consider looking into an FHA loan. These loans come from the Federal Housing Administration and often allow down payments with a minimum of 3.5%. If you're struggling to save for your down payment or need to put money down right away, this could be a good option. Conventional loans are also an option, but keep in mind that they favor those with good credit and the interest rate may be higher.

Local and State Assistance

Loans aren't the only option when it comes to finding help for a down payment. There are often a few different home purchase assistance programs at both the state and local level. This includes programs implemented by nonprofits, government agencies, certain employers, and even various foundations. As an example, oftentimes if you're employed as a school teacher, firefighter or nurse, there are zero down home loan options. The exact initiatives available will depend upon your state and even the neighborhood in question, but it's entirely possible that there is at least one program that could help make your down payment more attainable.

In order to find the best option, do some research about local programs as well as state-run programs. If you're having trouble finding information about either of them, reach out to your GayRealEstate.com realtor for a free no-obligation consultation. They often know what initiatives in the area could potentially help you with your down payment as well as your chances of being approved for them. An experienced realtor, in other words, is a vital asset when it comes to the homebuying process.

If you're looking for an experienced real estate professional to help you in your search for your first home, reach out to the team at GayRealEstate.com! We're ready to help you find the best fit, both financially as well as geographically. We'll find you a home you'll love in the neighborhood of your dreams, and we'll keep it in your budget.