Down Payment Options

For many home purchasers, one of the primary considerations is coming up with the funds for down payment and any closing costs. While this can be a challenge for any home purchaser, there are options that are available to make home ownership a reality.

First, there is a widespread belief that the minimum down payment to purchase a home is 20%. Not true! For purchasers of a primary residence, the minimum down payment can be as little as 5% of the sales price and for moderate income borrowers, the down payment can be as low as 3% of the purchase price.

Many borrowers also believe that the only source of down payment available to them is what exists in their checking or savings account. Other accounts can be a source of funds for down payment and closing as well. Among these are:

  • Secured Funds – A borrower may take out a loan and secure it against another asset such as other real estate or other financial assets
  • Stocks/Bonds/Mutual Funds – Publicly traded stocks, bonds or mutual funds can be liquidated for funds to close
  • Cash-Value of Life Insurance – Life policies can be sometimes be liquidated or used as a security for a loan for the down payment
  • Retirement Accounts – Similar to Secured Funds, retirement accounts such as a 401k or IRA can either be liquidated or used as security for a loan for the purchase of a primary residence (please refer to the 401k rules if utilizing this as a source. Restrictions will apply.)
  • Gift Funds – Funds from a relative may be gifted to a purchase for the down payment and closing costs

There are many options available for down payment and closing costs. Contact your Googain Loan Officer for details and options that are available.