The Down Payment
The amount you have available for a down payment will affect what types of loans for which you can qualify. Down payments typically range from 3.5% to 20% of the sales price. Most people save a couple of years for their down payment. Perhaps you can get a few ideas as to how you can save for your downpayment below.
Documenting Your Down Payment
Lenders seek your documenting the down payment coming from your savings. They want to see that you will have enough savings and/or assets over and above the down payment. This gives the lender confidence in your strength as a borrower and your ability to repay the loan. Take extra care to document the sources for any monies to be used for the down payment or closing costs.
Alternative Sources of Downpayment Monies
Housing Finance Agencies
These agencies offer special loan programs to low- and moderate-income buyers, buyers interested in rehabilitating a home in a targeted area, and other groups as defined by the agency. Working through a housing finance agency, you can receive a below market interest rate, down payment assistance and other incentives.
The primary mission of Housing Finance Agencies is to boost home ownership in targeted areas, among first-time buyers and those with little money for down payments. Most of these non-profit agencies were funded with state government seed money and now operate independently.Click here for a list of Housing Finance Agencies.