If coming up with the cash for a down payment on a house seems daunting, you’re not alone. About 60 percent of first-time homebuyers put down 6 percent or less on their new home, according to Down Payment Resource, an Atlanta based company. However we still always advise our clients to get that number as high as possible so that you can look like a strong buyer to sellers. So whether your still saving, or out looking at homes, take a look at these 5 tips because no home buyer has ever said they have too much down payment money.

1. Down Payment Assistance Programs. The first option to consider, is to work with a bank that offers down payment assistance programs. When used properly, it is essentially free money, however, you are usually restricted geographically on where you can buy a house. 

LoanDepot offers a great option for those who need down payment assistance for purchasing a primary residence. They have  a program that will grant 4% toward a down payment or closing costs and if you stay in the home for 5 years, the 4% assistance will be forgiven!  This program can also be used for 2-3 family homes, as long as you do not own any other homes.

LoanDepot also has other extremely low, 3% down program for a conventional loan!

Contact Angelica Tanti with LoanDepot for more information!

2. Analyze and simplify your budget. If you're really serious about coming up with your down payment funds, it is essential to analyze your past year of spending and your monthly budget. Isolate your top 10 budgetary line items and do an internal gut check on where you can become more frugal. 

If you spend $5 a workday on a bagel and coffee at breakfast and another $15 on your takeout lunch, that's $400 per month – almost $5000 a year! – you can save by simply bringing these things from home. If you are still paying $100+/month for cable, $20 for a yoga class, or premium pricing for unlimited cellular service - there are dozens of cheaper alternatives for these types of usual spending. For example, I drink tea instead of coffee,  my gym in Verona has yoga almost every morning with a $22/month membership, and for TV, I use my parents Netflix account and my sister's Showtime! 

Redirecting the dollars you would normally spend for some of these big-ticket items back into your down payment savings account is like pressing fast forward on your home buying timeline.

2. Purge and Sell. Take a good look around your current place, how often do you really use all of your possessions? If you make a move, what absolutely needs to come with you? What doesn't? If you're really serious about home buying, your new mindset is to accumulate as much cash, and to get rid of as much clutter as possible. Gather everything you don't use/wear/appreciate often, and start taking photos. You may not see so much value, but why not try to sell? With so many re-sale apps and websites, you'll be surprised how many people will want to buy your stuff. 

Check out these links below:

Don't underestimate the amount of cash you can bring in from the things you already own. Plus, having less stuff will make the moving process so much easier, and allow you to be more flexible in your home search process. You DO NOT want to shop for a condo/house based on storage space!

3. Find your Side Hustle - Is your main job not particularly draining? Are you will willing to sacrifice some hours on the weekend to make some side cash? Find a side hustle, and push all of the profits to your savings account, OR use the extra money as your "fun money" so you can dedicate more of your main income towards down payment saving. These days, side hustle opportunities are endless!

  • Drive/Rideshare: Have a car in good condition that you don't use very often? Turo, JustShareIt and Getaround are services that provide car owners a way to rent out their car for cash, as well as an affordable rental option for people who just need to borrow a car for a short time. Or, join the masses and join Uber/Lyft/Sidecar. 
  • Pet/Child Care: Have a knack with kids? Do you love animals, but dont have the time to take care of one full time? Wag and Rover are pet sitting Apps that offer daytime and overnight jobs. The company states that you can earn more than $1,000 a month working with them. Personally, my second job has always been childcare and I use Care.com. You can choose occasional, part-time or full-time work — and the average hourly pay is $11.25.
  • Virtual Assistant: Perform a variety of tasks ranging from setting up appointments to typing out emails and buying supplies — all done from the comfort of your own home, and outside of normal business hours. Sites like RedBeaconZirtual and VirtualAssistants make the process of finding an executive in need of some flexible assistance pretty easy — but may require a fee. 
  • Website testing : Sites like UserTesting will pay you $10 for a 20-minute test. All you have to do is test out websites and provide your feedback. Check it out here.
  • House-sitting : This is a great way to make a good chunk of cash overnight or in just a few days! Check out these sites that find opportunities for you: housecarers.com and Mind My House.
  • Other odd jobs: 
    • CheckPoints.com: Simply scan the barcode on an item in a store and the manufacture will reward you. No purchase of the product is necessary. You can redeem the points you collect for free gift cards, airline miles and other perks.
    • EasyShiftApp.com: You’re assigned “shifts” by product manufacturers who want people on the ground to go into stores and confirm that their merchandise is being displayed properly. The pay rate for a shift is between $3 and $8 and the money is remitted to you via PayPal.
    • FieldAgent: Find local jobs in your area and complete them within two hours for cash.
    • TaskRabbit: Get paid by other people to do small tasks for them. For example, someone in your local area may be looking to hire someone to run errands for them — like pick up their dry cleaning or help them move. 
    • FocusGroup.com, which lists opportunities in your area and also pays $75 to $150 per survey you complete online.

4. Your Parents and Family. Many home buyers get by with a little help from their relatives. Most mortgage programs will allow for some portion of your down payment to come in the form of 'gift money' - money someone gives you to help you buy a home, free of tax. 

Check in with your mortgage representative about how much of your down payment needs you can satisfy with gift money – guidelines varies widely based on how much of your own cash you have to put down and what loan programs you're applying for. Lenders almost always require that gift money be contributed along with a gift letter that states that the giver is a relative and that the money is a gift, not a loan. The lender may also require to see a bank account statement from the giver showing that the money was theirs to give.

Here is more information on receiving gift funds

5. Your Assets. Some retirement accounts allow you to borrow against or pull out funds, penalty-free, to apply them toward your down payment on a home. Obviously your specific circumstances will determine if it is advisable for you to tap into your 401K or IRA and plug that cash into a house. For some buyers, it may make sense to get your down payment up to 20% by borrowing a few thousand dollars from yourself!

If you are ready to start thinking of buying this year, let’s have a conversation. Our team works with many lenders that can help us create a financial plan to make buying a home this year a reality for YOU.  Contact us at [email protected] for a complimentary buyer consultation.

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