Finding That Down Payment-Did You Turn Over the Couch Cushions?

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As we begin 2016 I, like many of you am curious about what this year holds for interest rates and the housing market. Depending on which prognosticator you read, interest rates will either go up, or they will stay the same. (Why didn't I think of saying that? I could be making the big bucks like those guys.) Anyway, I take that to mean it's anyone's guess. However, one thing that I did glean from the paid seers, is that one issue that remains is the decrease in first time home buyers.

Back in the days of the housing boom, first time home buyers made up a little over 40% of the home buying market. Last year's first time home buyers came in nationally at a bit over 30%. Various reasons have been cited for this change - student loan debt, slow economic recovery, more new buyers living at home. All are probably valid points, but the one thing that all the experts seem to agree on is the inability of potential first time home buyers to obtain down payment funds.

There is good news on this front. It is not new news, but many people still aren't up to speed on he subject. There are two mortgage loans that do not require a down payment: VA and USDA. These two loans do not work for everyone-obviously if you have never served in the military you aren't VA eligible and USDA has income and geographic limitations. Yet there are other possibilities that don't require a King's Ransom as a down payment.

In Indiana, the Indiana Bond program offered by The Indiana Housing and Community Development Authority offers down payment assistance for qualified FHA buyers. This may be an excellent choice for those who need down payment assistance and qualify credit wise as well as income wise.

There are also some excellent low down payment choices. FHA has a 3.5% down payment requirement. The 3.5% can be a gift from a family member if the borrower doesn't have the funds for down payment. FHA also allows non occupying co-borrowers if for any reason the borrower's income isn't enough to qualify to purchase a home. In the case of a co-borrower both the borrower and co-borrower must qualify for the loan credit wise. I have had several questions lately about borrowers who want to use a co-borrower because their own credit isn't enough to qualify-in all cases if one has a co-borrower both borrowers must have eligible credit.
Conventional lending also has a 3% down mortgage that is available for borrowers who qualify conventionally. Down payment can be a gift in this case as well.

So depending on what a first time home buyer wishes to buy (or a second or third time buyer for that matter) there are options that shouldn't break the bank. Don't assume that you can't buy a home because you don't have 20% to put down. This is something that every renter should consider if they intend to be in a specific geographic area for any length of time.