Coming up with cash can be challenging, especially in our modern world that seems to encourage taking on debt rather than saving your pennies. I will give you the obvious answer first – save up. But how do you do that when you are trying to make rent, pay for essentials and sometimes take care of others besides yourself? It’s a challenge. What will it take to rise to that challenge? Sacrifices perhaps. Start small. You and your future home are worth the sacrifice.
- Have a plan to get out of debt. If you are giving money to the credit card companies and feeding them interest, you are keeping money out of your own pocket. There are many ways to approach this if you do a search for debt reduction. I really like Dave Ramsey.
- Note where your frivolous spending is. What if you just cut your habits of eating out, grabbing a latte, shopping on weekends or whatever it is by half. I’m not saying give it up entirely just curb it and bank the savings.
- Sell stuff – Offer Up, Craigslist and others make it fast to unload things you just don’t need and are nice way to pocket some funds.
- Take on extra work – odd jobs or take a seasonal extra job for the sole purpose of banking every pay check.
- Other funds – If you have a retirement fund and you are a long ways from retiring, this can be an acceptable source of funds. You will need to check with the rules on the fund. Sometimes you can take a special withdrawal just for home purchase. If this is the case, up your deduction so that it leaves before you have a chance to spend it. Be sure to check on what the tax rules are on this and weigh the cost of any penalty.
- Other assets – Do you have a vehicle, boat or other titled asset that is free and clear? You can borrow against it to purchase.
- Gifts – If you have a relative that wants to contribute to your investment in your home, they can give you a monetary gift. Note that this has some forms and rules to it. Not just anyone can give you a gift and the lender will count it. Make sure you ask for forms, rules and requirements for gifts. Generally speaking it can come from a relative.
- Grants – these can come from nonprofits, employers, or other local programs that are incentives for home ownership.
- Down Payment Assistance – Many of these have location or income restrictions. Check with all jurisdictions – City, County, State. If you are a first responder or civil servant there may be opportunities for you as well – check with your HR department.
- Zero Down Loan Programs – VA loans are available for veterans with nothing down and can often be orchestrated to purchase for nothing out of your pocket. USDA loans in certain areas if you meet the criteria are also a way to get in with little or no cash assets.
If home ownership is your goal talk to partners who can help you plan for it, open a special bank account to start saving up for it. There is little more satisfying that setting a goal and being able to see the plan come together a little bit at a time.
Would love to connect with you if you are thinking about a purchase – first ever or one of many. Your goals and budget matter and I am happy help you talk through those if you are unsure what they are.
Have helped buyers of all types and financial levels and worked on 1000's of loans.
There is always something new!
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