I have to admit, you hear lots of things that are just flat out not accurate when it comes to purchasing a new home. One of the biggest and most common myths is, I have to have 20% down to purchase a home and a ton of savings in the bank. While it is no secret that lenders have tightened the guidelines on what is allowable there are still programs for first time homebuyer’s with $1,000 down and if you don’t meet that requirement then you can get away with as little as 3% down. There is always the VA option, even if you served decades ago, you may be eligible for no money down with the VA loan. As for the hefty savings account, it is a wise idea to have a bit of money in the bank after closing in case something comes up but often it is not a lending requirement.
Having survived the last five years of a difficult economy, most folks are pining trying to come up with the 3% minimum down payment requirement. There are lots of ways to get the down payment if you don’t have that cash sitting in a bank account. For example, most employers will allow for you to borrow from your 401K and pay yourself back the interest on the money. If you have a vehicle that you own free and clear you can borrow against the title on that. You can leverage money that you have invested in a brokerage account- similar to the 401K option. Gift funds are allowable under certain situations. There are lots of ways to come up with a down payment–just be certain to discuss with your lender prior to do anything so that you can be certain you are operating within the allowable guidelines.