Will I need a down payment? 

Without a doubt, the quickest way to set your home loan up for the best rates and easiest close-ability is to bring more down payment to the closing table. That said, a down payment is not an ultimate gate-keeper to you owning a home.  In fact, USDA and VA loans are available with zero down payment, and MHDC loans offer you the option of a down payment less than 1% of the value of the home.  With any loan, the most important “rules” are that you have acceptable credit, income, and cash flow to grant you eligibility from the lender.

Down Payment Size Requirements:

Conventional loans typically require 5% of the purchase price to be paid at the time of closing, which needs to be verified as your own funds proven through 2 months of bank statements.  There are options, however, which allow you to receive a gift from a family member, etc. for the down payment on a conventional loan, but tighter underwriting standards apply. FHA loans will only require 3.5% down payment but have limits on the maximum loan size, which is approximately $270,000 for the areas we serve.

Keep in mind that for any loan where your equity (down payment) is less than 20%, you will be required to pay a private mortgage insurance premium (known as PMI), which protects the bank in the event that you default on your loan. Depending on the size of your loan, these premiums can raise your monthly payment, so you will really want to consider bringing a bigger down payment when you can.

Upgrading Homes

If you already own a home, your current equity can serve as a big portion, if not all of your down payment needed.  This means that the money you owe on your home subtracted from the selling price of your home is yours to apply towards the next loan. 

Saving Up

Our best advice is to get intense about saving for the year leading up to your home loan so that you can keep plenty of personal savings for the little expenses that add up with the responsibility of home-ownership.  Keep in mind that any deposit you obtain into your bank account within 60 days prior to your loan closing will require a paper trail or other verifiable explanation for the lender to count that income.  If you are looking to get started on your down payment early, here are 23 great ways to earn some extra dough:

23 Great Ways to Scrape Up Some Extra Cash

  • Host a giant garage sale. Sell cookies and lemonade for a little extra!
  • Mow a couple extra lawns
  • Babysit
  • Pet sit / house sit
  • Save your change
  • Sell gadgets / Movies / CDs you aren’t using on Craigslist.org or Ebay
  • Recycle Scrap Metal
  • Get a part time serving job
  • Deliver pizzas
  • Sell crafts on Ebay or Etsy
  • Sell old clothes / kids toys on Facebook
  • Take part in clinical medical studies
  • Shovel snow / rake leaves / trim bushes
  • Take paid online surveys
  • Sell old cell phones
  • Sign up for odd-jobs on Fiverr.com
  • Donate Plasma
  • Freelance write on Odesk.com
  • Become a virtual call center agent on LiveOps.com
  • Tutor students or give lessons in one of your skills
  • Sell your digital photos on Shutterstock.com, Dreamstime.com or CreStock.com
  • Find Odd Jobs on Craigslist
  • Teach English classes online at italki.com