The single biggest obstacle most new homebuyers face is having a down payment. In fact, many people still think that if they don’t put down 10, 15, or even 20%, then they won’t be able to buy.
The reality is, there are many options still available for responsible and credit worthy individuals to obtain home financing without the need for a large cash down payment. Not very long ago, even more options existed allowing for 100% financing, but due to the recent downturn in prices, mortgage defaults and liquidty issues these options have dwindled, but are not completely gone.
One loan program surging again in popularity is an FHA loan. As of this writing, the FHA loan program requires only that a borrower have a 3% investment or interest in the purchase price of a home. FHA down payments can be 100% gift funds, and can come from many sources such as an outright gift from a family member, employer, or charitable organization. Community programs often have grants or low to no interest loans available to meet the minimum down payment requirement as well.
One of the most popular Down Payment assistance programs available today is the Nehemiah program. The simple explanation for how this works, is that a seller may agree to make a contribution to the Nehemiah program in the amount of assistance asked for by the buyer, along with a small processing fee. The program will then make a transfer of the funds to the closing agent for use by the buyer in the form of a gift. You would need to check with you lender to determine which loan programs allow for this type of gift.