Recent articles on the housing market suggest that one of the greatest difficulties to buying a first home is coming up with the down payment. There are many down payment options available besides cold hard cash (though cold hard cash is always good, too). If buying a home is a high priority for you but you are low on down payment funds, it might be worth your while to look into some of the options out there.
FHA Loans. The FHA-insured loan products require just 3.5% down on your home purchase, and you can ask the seller to cover closing costs. While the FHA loan may cost a bit more on the monthly payment than a conventional loan, most buyers feel it is worth it in the long run due to the rising equity. Also, FHA loan will require the seller the fix any repairs called out on the appraisal to make sure the home meets heatlh and safety standards (and to make sure the loan’s collateral—the house!—is in good condition).
VA Loans. If you are a veteran, you probably qualify for a VA-backed loan, which does not require a down payment. Rates are good, and the appraisals are stringent to make sure the home is in good condition. Make sure to work with a mortgage broker who specializes in VA loans.
Down Payment Savings Accounts. Some housing non-profits—like the Portland Housing Center—offer down payment matching programs. If you open an account just for saving money for a down payment, it can be matched up to 3:1. For example, save $2000 and get a $6000 match for a total of $8000 which can be used for down payment and closing costs.
The Silent Second. There are solid programs out there to loan you the money for a 20% down payment, so that you can get a conventional loan (without the extra FHA fees). Silent second programs usually do not require payment until you sell the house. There is a wide variety of programs like this. Just make sure they are from reputable sources. Government-backed programs, like Oregon’s MAP-80, are the best.
Good Neighbor programs. Look into programs that help certain neighborhoods come to life or that help certain professions buy homes affordably. For instance, the Portland Housing Bureau offers great rates to those who qualify to buy homes in the Lents area or Interstate Corridor. Also, look into programs just for teachers, police and firefighters.
Family. And, of course, you can get "gift money" from family on some loans. It just has to be documented and "seasoned." Talk to your mortgage broker on how gift money can help your down payment.
There are a plethora of options out there to help with low-to-no down payments. However, none of them are easy-peasy. You will have to jump through a few hoops to reap the benefits. If you want to pursue them, it is best to plan ahead. A great place to start is the Portland Housing Center. They can point you in the right direction (and possibly even do the loan—they are terrific to work with).