Help with Downpayment

DR527 · ‎07-08-2016

So getting right to the point. As the title reads. I have no idea what to do for a down payment. My wife and I have worked on our credit. And it is now good enough for a mortgage loan. As we are moving along in the house buying process. We are realizing that we really don't have much in the form of a down payment. We live in Pennsylvania, and even with a FHA 3.5% DP. And tapping into our 401k's. And some down payment assistants from a organization nearby. We will be at least $8,000 shy of what we need just for the down payment. And that's still not covering Closing Cost. We thought about asking family and friends for the money. But we are the richest people we know. Sadly... So my question is, what's the smartest way to come up with the difference. Is taking a loan out, something I could even do. Or will that be a red flag to the mortgage company?is there a company or group in PA that provide help. Or do I have to just work and save? Could use some advice.

Anonymous · ‎07-08-2016

Me and my husband only had about $7000 for downpayment and closing costs for a $170,000 mortgage loan. You would generally asks for closing assistance from the sellers. We asked the sellers to pay 3% of the closing costs, and we went with a credit union since generally they usually have low cost closing. I think we only had to pay $5000, maybe a little lower for cash to close, but YMMV because it depends what purchase price your home is.

DR527 · ‎07-08-2016

The house we are looking at is priced at $339,900. The area we are looking at ranges from $99k to $400k. Depending on size and built. And thank you. We never considered asking the Seller to help.

StartingOver10 · ‎07-10-2016

@DR527 wrote:
The house we are looking at is priced at $339,900. The area we are looking at ranges from $99k to $400k. Depending on size and built. And thank you. We never considered asking the Seller to help.

The seller is allowed to help you with closing costs and pre-paid expenses due at closing (escrows and pre-paid interest). The seller specificallly can not help you with a down payment at all. For FHA loans the seller can contribute up to a maximum of 6% of purchase price toward your closing costs. The hard part now is this: in a seller's market the seller doesn't want to contribute a large amount, even if you can get them to agree to contribute something. In some markets they won't contribute anything.

Also you can not borrow your down payment unless it is from your 401k or thrift savings type plan.

You can get a gift from family members though for down payment. Follow the gift guidelines of your lender and speak to your LO before you get the gift so you do exactly as required or the funds won't be counted by the underwriter.

You can sell things around the house - we all have excess items gathering dust at home Sell it on craigslist or something similar. Keep good records so you can answer the underwriters questions when they ask where your funds came from because s/he will ask. All funds have to be sourced or seasoned.

You can work a second job temperarily. You won't be able to include the income to calculate your DTI but you can use the funds from the second job as the balance of your down payment. Keep good records. Copy your paycheck and put those funds in a separate savings account.

Put your heads together to see if there are other sources of funds.