With home prices rising and the pressures of everyday expenses, the idea of setting aside a large sum of money for a down-payment can seem overwhelming. Many potential first-time homebuyers are looking for alternative ways to cover their down-payment without having to rely solely on your personal savings. Whether it’s tapping into your 401k, receiving help from family and friends, or exploring assistance programs, there are a few options that may help you reach your goal of homeownership sooner rather than later if they are available. You should always consult a financial advisor or tax professional before using any of these methods. Here are a few to consider:
Pulling from Your 401k
If you’ve been contributing to a 401k retirement account, you may be able to use some of those funds toward your down-payment. There are two main ways to access money from your 401k for a home purchase: borrowing from it or taking a withdrawal. You should consult a tax professional or other financial advisor to discuss your potential options.
Receiving Gifts from Family
Many first-time homebuyers rely on the generosity of family to help with their down-payment. Most lenders allow homebuyers to use gifted funds toward the down-payment, provided the money is truly a gift and not a loan.
Down-Payment Assistance Programs (DPA)
Some state and local governments offer down-payment assistance programs (DPAs) to help first-time homebuyers cover their down-payment costs, if you qualify and if available. These programs may come in the form of grants or low-interest loans designed to make homeownership more accessible. Generally, these programs are geared toward first-time buyers, low- to moderate-income earners, or individuals purchasing in specific areas. Every program has its own eligibility requirements, restrictions and application processes, so be sure to research the local programs in your area to see availability and qualification requirements. Restrictions may apply.
VA Loan for Veterans and Active Duty Military
For those who qualify, a VA Loan may be a good option. Available to eligible veterans, active-duty service members, and certain members of the National Guard and Reserves, VA loans may offer numerous advantages that can make homeownership more attainable.
- Zero down-payment options are available for qualified borrowers, which can significantly reduce the upfront costs of buying a home.
- VA loans may have lower interest rates and no private mortgage insurance (PMI) requirements, resulting in potential long-term savings, if you qualify.
- Flexible credit score requirements make this loan accessible to many borrowers.
Restrictions and availability may apply. There’s no one-size-fits-all solution to saving for a down-payment but exploring these alternatives may help make homeownership more achievable. By taking advantage of these alternatives, you could be moving into your new home sooner than you think!
Interested in learning more about your mortgage options or how we can help guide you through the homebuying process? Visit Pulte Mortgage today!
