Down payment for first time home buyer

sarah_ann81

My husband and I have decided to buy a house but are struggling for money for a down payment. Where do I go to find first time home buyers deals? Thanks!

musictchr25

You can check with the city or town that you will be moving to - sometimes they offer deals to first time homeowners. There are federally funded programs too, but by this time of the year, they are typically not available, as funds have run out.

FHA loans don't require a 20% down payment. They typically look for 3%, 5%, or 7% of the purchase price, so that could be an option as well.

Don't rely on these programs though. You will want and need cash in your pocket for both a down payment and an emergency fund. You cannot afford, literally, to go into the home buying process with no money in your bank account. Spend a year cutting back on your spendings and open a high yield savings account or CD to gain more on your money. I think you'll be surprised how much extra money you could have in your pocket once you cut back on somethings and cut others out. 

SmrBrd2012

I agree with PP. You should really try to have at least some down payment for buying a home. In our area, 20% would have taken forever. We were able to get a conventional mortgage loan with 10% down. I've heard fha loans are a bad idea so you should try to stick with conventional if at all possible.

jtmh2012

And remember, even with a clean inspection, things still break.  Our A/C worked fine for 6 months until the compressor ceased up.  Fortunately, we had a home warranty, but it was still $300 after the warranty.  Without it, we would have been looking at $1000-2000.

I assume you're renting now.  Think about all the things you called the landlord about while you've been there.  Those are all your responsibility now.

Not trying to scare you away from home ownership.  I think ownership is much better than renting.  However, an emergency fund is NOT optional.

Bubblegum5586

AprilH81 said:

While an FHA loan sounds great because of the lower down payment requirements there are some down sides that you really need to consider.

1) Your Private Mortgage Insurance (PMI) NEVER goes away unless you refinance to a different loan product after you get 20% equity.

2) FHA loans are very strict about the condition of the house and what they deem "safe and livable", these rules will possibly annoy the seller to no end.

Continue to save money, cut expenses and wait a bit to buy a house.  After you get the keys you will still have a lot of expenses you need to be prepared for.  You will need to (possibly) put down deposits/hook up fees for utilities, lawn mowers, curtains, new furniture, minor repairs, maintenance, new paint, etc.  

We just bought a house and the first two months in the house we have spent about $15,000 on stuff (new appliances, furniture, paint, lawn equipment, deck furniture, new electrical panel and installation of over head lights in the bedrooms).  We just made our first payment to our contractor for a kitchen remodel to the tune of $10,000 for new cabinets.  Houses are expensive, even if your new home doesn't need the work ours did.

Of all the houses we looked at we got the most "move in ready" house we saw. WOW still so much work. Mostly because we wanted to make it our home, but with paint, new furniture, curtains, yard supplies and more it was a couple thousand in that first month!

BlueBirdMB

sarah_ann81 said:

My husband and I have decided to buy a house but are struggling for money for a down payment. Where do I go to find first time home buyers deals? Thanks!

My advice is this: Don't buy the house if you don't have 20% plus an emergency fund in your pocket.  People getting loans that they couldn't afford is what created our housing crisis.  If you don't have money saved, then you probably won't be able to afford the house.

Sisugal

Read Home Buying for Dummies and Mortgages for Dummies --- some great information for first time buyers.
I will repeat my home buying advice --- do NOT spend more than 25-28% of your TAKEHOME pay for housing (which includes the mortgage+PMI+insurance+taxes+utilities!!~!)

You need to save, save, save before buying a house - as being a home owner is so much more than a mortgage payment.  Save for a 20% downpayment, closing costs, moving costs, utility start up deposits, decorating & additional furniture, repairs & renovations, yard items.

You NEED a good emergency fund in place before you even think about buying a house.

Pay off - or significantly down consumer debt.  The less you have the better off you will be

Doing this may take longer to get into a home of your own, but you will be in such a better place financially. going forward.

Good luck.

BlueBirdMB

Sisugal said:

Read Home Buying for Dummies and Mortgages for Dummies --- some great information for first time buyers.
I will repeat my home buying advice --- do NOT spend more than 25-28% of your TAKEHOME pay for housing (which includes the mortgage+PMI+insurance+taxes+utilities!!~!)

You need to save, save, save before buying a house - as being a home owner is so much more than a mortgage payment.  Save for a 20% downpayment, closing costs, moving costs, utility start up deposits, decorating & additional furniture, repairs & renovations, yard items.

You NEED a good emergency fund in place before you even think about buying a house.

Pay off - or significantly down consumer debt.  The less you have the better off you will be

Doing this may take longer to get into a home of your own, but you will be in such a better place financially. going forward.

Good luck.

If everyone followed this advice, there wouldn't be foreclosures. 

JoanE2012

jtmh2012 said:

And remember, even with a clean inspection, things still break.  Our A/C worked fine for 6 months until the compressor ceased up.  Fortunately, we had a home warranty, but it was still $300 after the warranty.  Without it, we would have been looking at $1000-2000.

I assume you're renting now.  Think about all the things you called the landlord about while you've been there.  Those are all your responsibility now.

Not trying to scare you away from home ownership.  I think ownership is much better than renting.  However, an emergency fund is NOT optional.

Our whole central A/C crapped out last month, just over a year after we bought the house.  We just spent $10k on a new one!  Savings and an emergency fund are key!

jibberjabbers

Had no idea there were programs for first-time home buyers. Thanks for the info.

I've checked online and yes, funds have been depleted since 2012 for my area unfortunately.  I'll call tomorrow to double-check.

jtmh2012

JoanE2012 said:

jtmh2012 said:

And remember, even with a clean inspection, things still break.  Our A/C worked fine for 6 months until the compressor ceased up.  Fortunately, we had a home warranty, but it was still $300 after the warranty.  Without it, we would have been looking at $1000-2000.

I assume you're renting now.  Think about all the things you called the landlord about while you've been there.  Those are all your responsibility now.

Not trying to scare you away from home ownership.  I think ownership is much better than renting.  However, an emergency fund is NOT optional.

Our whole central A/C crapped out last month, just over a year after we bought the house.  We just spent $10k on a new one!  Savings and an emergency fund are key!

We put $6400 into a unit at our last house a couple years before we sold.....:(

stokesm21

The word "struggling" in your OP isn't very encouraging.  My thoughts are if you can't afford to save for a DP then you can't afford a house period.

  

ab6704a

stokesm21 said:

The word "struggling" in your OP isn't very encouraging.  My thoughts are if you can't afford to save for a DP then you can't afford a house period.

  

This.  OP take it from someone who made this very mistake.  I managed to get into the house with a state down payment assistance program and  then couldn't afford to maintain or fix anything and wracked up a lot of extra debt because of it.  It's taken me 5 difficult years to dig out from under that mistake.

Sisugal

We saved for 6 years prior to buying our first home.  It was worth the wait - allowing for a large downpayment- which made our monthly mortgage payments low, a good fund for renovations and still have a good emergency fund in place.  Do NOT rush into home ownership until you are financially ready.

Edward45

I agree with the idea of having a good downpayment in hand before buying your first home, but don't waste too much of time waiting to earn that amount. Keep yourself a target, within which you should be able to manage the downpayment. Also, for a year or so, the mortgage rates are going to be in the new low rates, and this adds as a benefit for those who are planning to take a mortgage soon. Private financial solution services, like Safebridge Financial Group www.safebridgefinancial.com provides lower rates than FHA and more flexible too.

Keep a target, to have your downpayment ready, and go on with a good mortgage support for the first new home.

Sisugal

What are you doing to get those savings? Have you cut back on spending? Added 2nd PT jobs? Sold things you no longer need?
Do you have a good emergency fund in place (6 month's expenses)?
Are you funding retirement?

If you cannot save a downpayment, closing costs, moving and start up costs - then you are not financially ready to buy a house. You just aren't ready - so do something to get ready.

We took 6 years to save prior to buying our first house (lived in a HCOL at the time and then move to MCOL area - where the money went much further enabling us to put more down and pay off the mortgage quickly.)

Owning a home is sooooo much more than the monthly mortgage payment.
Read these books before buying anything -
Home Buying for Dummies
Mortgages for Dummies

Why are you struggling to save for your downpayment? Inadequate income, debt, lifestyle??
WANTING to buy a house is not a sufficient reason to buy one.

Don't be in a hurry - take this time to get your finances in order - you will be glad you did.