09/28/2020: How to Fund a Down Payment
This is the tenth in a series of videos and articles inspired by Mars Bank’s First Time Homebuyer live events. Sign up today for our free online first time homebuyer seminar.
The down payment is your initial investment in your new home. The down payment can be funded in different ways: from personal savings, gift funds from a family member, seller assist, or grant money for first time homebuyers.
When using personal savings for the down payment, that money must be in a savings account for at least two months and must be sourced from a normal income stream. An example of a normal income stream is your payroll deposits.
Gift funds may be used for the down payment as well. A family member may gift a portion of the down payment by submitting a signed gift letter stating that the money is a gift and is not a loan.
Seller assist is when the homeowner selling the home agrees to pay an amount of the sale price towards closing costs to the benefit of the buyer. The seller assist can be a percentage of the sale price or a flat amount. This is typically three to six percent of the sale price. Sellers may choose to agree to assist, but they are not required to do so.
First time homebuyers and others may be eligible for grant funds which can help fund down payment and closing costs. Grant funds sometimes require credit counseling. Grants have annual income restrictions based on the homebuyer’s whole household income. Grant funds are limited, so they are available on a first-come, first-served basis.
As you can see there are many ways to fund a down payment. Mars Bank can help you determine which is best and work out what is needed on your end. To get started, contact Mars Bank today.
Considering a first home purchase? Sign up today for our free online first time homebuyer seminar.