When purchasing a home, most people will need to come up with at least some amount of money for its down payment. Many lending programs today will require that a buyer put down a minimum of 3.5%. Although in a number of cases, 10 to 20% will be the norm.
Depending on the purchase price of the home, the down payment requirement can turn out to be a pretty hefty sum. So, which sources might you be able to tap in order to find the money you need in order to qualify for a loan?
One obvious source is your checking and / or savings account. Oftentimes, when someone has a goal of purchasing a home within the next few years, they will begin setting aside money – often on a regular basis – for the purpose of using it as a down payment.
In some instances, family members or other loved ones may offer to gift the money that is needed for a home’s down payment. If you plan to go this route, though, it is important that you provide your lender with a “gift letter” that states your relationship with the provider of the gift, as well as the source and the amount of the funds.
If you currently own a home or condominium that you plan to sell when you move into your next residence, you may be able to use some or all of these proceeds as your down payment – provided that you have enough equity in the property. If this happens to be the case, you may find that you only need to come up with very little – if anything at all – from other sources.
Are you considering the purchase of a new home in the near future? If so, we can help. Contact Us today and we’ll help you locate the property of your dreams in your ideal location.