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Planning and saving for your down payment is one of the most important steps of your mortgage loan process. Here are some tips that can help you get closer to your financial goals where the down payment is concerned.

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FHA Home Loan Down Payment Tips

October 16, 2019

FHA Home Loan Down Payment Tips
Are you planning the purchase of a new home? Do you need to start thinking about the down payment you’ll be putting on the real estate you’ve selected on your own or with the help of a realtor?

Planning and saving for your down payment is one of the most important steps of your mortgage loan process. Here are some tips that can help you get closer to your financial goals where the down payment is concerned.

FHA Loan Down Payment Advice: Start Saving Early

The earlier you begin to save for your down payment, the better off you will be when it’s time to start house hunting. There are several reasons for this, but one of them is how seriously you are able to approach a seller. 

If you cannot make your down payment when you discuss the purchase of a house, you’re closer to the window shopping phase of house hunting than the ability to make a serious offer. But keep reading, because there ARE options for those who can’t or don’t yet have enough of a down payment to get started.

Know Your Money Options With an FHA Mortgage

In this case, “money options” includes the ability to negotiate with the seller to have the seller pay up to six percent of the sale price of the home in closing costs. No, the seller CANNOT put money toward the borrower’s down payment, that is not allowed.
 
But having the seller’s six percent frees up that money the borrower would have otherwise paid on closing costs.

That is money that can go toward the down payment.

Your other money options include financing certain allowable closing costs rather than paying them up front. Again, the money you hang onto up front by financing the Up Front Mortgage Insurance Premium, which must be paid in full at closing or financed in full instead--no partial payments are allowed.

Find a Down Payment Assistance Program

Down payment assistance programs are often made available by state or local governments, by private agencies or other third parties. While the FHA and HUD do not offer down payment assistance, you can search your local community to see what agencies might be able to offer down payment grants. 

Some such grants may favor first-time buyers, others may have a financial need requirement, while some state or local programs are simply aimed at helping any house hunter get into an affordable mortgage.

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