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One of the most common questions about the down payment involves how to pay less up front for your home loan-what are the best ways to lower the amount of money you have to provide for the required minimum 3.5% down on a mortgage?

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

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Ways to Lower Your Down Payment Out-of-Pocket

March 23, 2019 - The down payment is an issue first-time home buyers are often nervous about. One of the most common questions about the down payment involves how to pay less up front for your home loan-what are the best ways to lower the amount of money you have to provide for the required minimum 3.5% down on a mortgage?

Be Prepared to Haggle

First-time home buyers often don’t enjoy the notion of negotiating with the seller; that is one of the reasons why the real estate agent is in such demand when it’s time to purchase that first home.

But negotiating with the seller can pay off in the form of a seller contribution that can help you lower your up-front, out-of-pocket mortgage loan expenses. To be clear-the seller is NOT allowed to provide an FHA borrower with down payment funds.

However, the seller IS permitted to contribute up to six percent of the asking price of the home in the form of seller-paid closing costs. That frees up money you would otherwise pay to close the deal that you can switch to your down payment.

Be Prepared to Explore Your Local Options

There may be local agencies, including state government programs, designed to help the first-time home buyer come up with a down payment.

This type of down payment assistance must meet FHA requirements, but if there is a down payment assistance program in your area, look into it-you’ll be glad you explored the option.

Get the Help of Family

Family members are allowed to contribute toward your down payment but the money has to be sourced properly and verified by the lender. Don’t accept down payment gifts in cash-always make sure there is a paper trail on those funds because the lender will need the documentation.

Apply With a Co-Borrower

Having a co-borrower means your down payment requirement can be split between the two borrowers. FHA home loans require occupancy-the loan will be approved (assuming all other requirements are met) as long as at least one person obligated on the mortgage will live in the home as the primary residence.

Always remember that lender standards and other regulations such as state law may also be a factor in these area where applicable. FHA loan rules aren’t the only ones at work in lender transactions.

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