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  • Writer's pictureNicci Knows Philly Homes

3 Creative Ways to Nail Down Your Down Payment

You want to buy a house, but life keeps getting in the way. Maybe you're getting married, or expecting a newborn, or just haven't been keeping up with your savings account. Life happens -- but you're not out of luck. There's options out there for the resourceful home buyer to come up with the funds needed in order to close on a home.

Before we start, I'd like to get one VERY IMPORTANT fact out of the way: You do not need 20% down in order to buy a house. I repeat: You DO NOT need 20% down in order to buy a house. Philadelphia qualifies for conventional loan products that will allow you to only put 3% down. (If you'd like to have a conversation about this, all of my contact information will be at the end of this article. I'm happy to discuss home buying anytime, any day!)

So, without further adieu, let's get back to what we came here for. Check out these three creative ways to source your down payment money and get into the home of your dreams:

1. Crowd Fund Your Down Payment

Yes, this is a thing. A GoFundMe for home buying, of sorts. homefundit offers the only crowdfunding program approved to be used as a mortgage down payment in the nation. You share your campaign on social media and family, friends, even complete strangers can contribute to your down payment account. There isn't any transaction fees for the monetary gifts.

You'll have to raise the money in 12 months or less and be pre-approved for the program, first. You might also be eligible for an additional grant of up to $1500 if you complete home buyer education, as well. Pretty amazing, isn't it?

2. HOMEstead No Interest Down Payment Loan

PHFA (Pennsylvania Housing Finance Agency) offers an amazing program to help home buyers come up with the funds for their down payment. The HOMEstead program may qualify you for up to $10,000 in down payment and closing cost assistance in the form of a no-interest, second mortgage loan.

HOMEstead borrowers must meet the minimum down payment requirement based on whoever is insuring or guaranteeing the loan, and funding is allocated to eligible home buyers on a first-come, first-served basis. There's various restrictions to this loan product, so the best way to find out if you're eligible is to get in touch with a local lender that offers this program.

3. Pull from your IRA

Federal tax laws allow you to withdraw up to $10,000 from your IRA (individual retirement account) for your first home purchase. If you’re married and you’re both first-time buyers, you each can pull from your retirement accounts, meaning a potential $20,000 for down payment. Not too shabby!

If you took anything away from this article, take away these two things: You don't need 20% down to buy your first house.... and you don't need to blow through your entire savings account either. If for any reason you thought the closing table was beyond your reach, think again! Be resourceful in the process of buying a home and you'll set yourself up for long term success.

If you have any questions about purchasing your new home, please reach out to Philadelphia Real Estate Expert Nicole Neff.



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