Saving Money on a New House

One of the easiest ways to save on a mortgage is by making a substantial down payment. The larger your down payment, the less you will have to pay on a monthly basis. In most cases, home buyers are required to cough up at least 20 percent of a home loan in order to avoid Private Mortgage Insurance.

Whereas it would be wonderful if we could all put down 20 to 30 percent of our dream home’s total price, many potential buyers struggle to come up with even half that. Fortunately, for many first-time homebuyers, down payment assistance is available.

The Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) are government-run agencies that can help with down payments. With VA loans you don’t even need a down payment, while FHA loans are guaranteed and therefore more attractive to lenders. In addition, Home Investment Partnerships (a.k.a. the HOME Program) provides down payment assistance to low-income families. To qualify you must meet the eligibility requirements which are determined by income level.

There are also down payment assistance programs for people who hold specific occupations, such as teachers and firefighters, and those moving into underdeveloped or certain urban areas. It’s a good idea to research all of the programs offered, as there are quite a few. However, some are not legitimate, so be sure to check out all offers with a mortgage expert before agreeing to anything.

Anther way you can score money for a sizeable down payment is to ask a family member. The downside to this option is that even if you are fortunate enough to receive a significant amount of money from a relative, you may be subject to gift regulations. Some lenders require that any money gifted to a borrower by a family member must be accompanied by a certified letter which states that the money is a gift and not a loan, and will never need to be paid back. Financial institutions do this to ensure that borrowers are not creating additional debt in order to purchase a home.

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Michele Cheplic

About Michele Cheplic

Michele Cheplic was born and raised in Hilo, Hawaii, but now lives in Wisconsin. Michele graduated from the University of Wisconsin-Madison with a degree in Journalism. She spent the next ten years as a television anchor and reporter at various stations throughout the country (from the CBS affiliate in Honolulu to the NBC affiliate in Green Bay). She has won numerous honors including an Emmy Award and multiple Edward R. Murrow awards honoring outstanding achievements in broadcast journalism. In addition, she has received awards from the Aircraft Owners and Pilots Association for her reports on air travel and the Wisconsin Education Association Council for her stories on education. Michele has since left television to concentrate on being a mom and freelance writer.