Home Loan Down Payments
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Down payments are the main place to start when you are planning to buy a home. How much do you need and where does the money come from? My number one piece of advice and information: Most of my clients and friends get down payment assistance of some sort, whether its from family, and IDA, or 401k. Conventional loans start with down payments at 3%. This means that with the median Portland house price at just over $400,000, will need a minimum of $12,000. This doesn't include the closing costs- depending on taxes and loan costs, could be another $10,000-15,000. Here is a brief look at the down payment options:
1. Family: Buyers that are not Baby Boomers (I'm not going to write a Millenials post) often get a cash gift from parents, grandparents, aunts and uncles, older siblings, or family friends. This is so very very common, don't be shy to ask! Rents and student loans make it really tough to save large sums of money these days. Family can also co-sign a loan if they would like to have a more vested interest in the house. I've had several clients who were families, the older generation was buying the house cash and then doing a payment plan for the younger ones to buy the house from them. You can also do a mortgage after buying cash, but use the ease of using cash to beat out other buyers in a competitive market.
2. 401k- It's not my favorite option, but you can pull funds from a 401k or other retirement savings plan. I like this if the mortgage is going to be less than the rent was, or you have another plan for saving more money and reimbursing the retirement savings quickly.
3. IDA- Individual Development Accounts are matching savings accounts you can utilize through the Portland Housing Center. They are meant to be used for at least 6 months, and are a 3:1 match! I recommend using other mortgage brokers than PHC, but I have some great referrals for you! This program is fantastic if you are 6-12 months away from buying, you can add a lump sum at any time and then more money monthly or with paychecks.