6 Creative Ways
to Afford a Home
If your income and savings are making homebuying a
challenge, consider these options.
- Investigate local, state, and national downpayment
assistance programs. These programs give loans or grants to cover all or
part of your required downpayment. National programs include the Neamiah
program (http://ww.getdownpayment.com)
and the American Dream Downpayment Fund from the U.S. department of Housing and Urban Development (http://www.hud.gov).
- Get the seller to provide financing. In some cases,
sellers may be willing to finance all or part of the purchase price of the
home and let you repay them gradually, just as you do a mortgage.
- Consider a shared-appreciation, or shared equity,
arrangement. Under this arrangement, your family, friends, or even a third
party may buy a portion of the home and thus share in any appreciation
when the home is sold. The owner/occupant usually pays the mortgage,
property taxes, and all maintenance costs, but all investors’ names are
usually on the mortgage. There are companies that can help you find such
an investor if your family can’t participate.
- Get help from your family. Perhaps a family member will
loan you money for the downpayment and/or act as a cosigner for the
mortgage. Lenders often like to have a cosigner if you have little credit
history.
- Lease with the option to buy. Renting the home for a year
or more will give you the chance to save more toward your downpayment. And
in many cases, owners will apply some of the rental amount toward the
purchase price. You usually have to pay a small, nonrefundable option fee
to the owner.
- See if you can qualify for a short-term second mortgage to
give you the money to make a higher downpayment. This may be possible if
you have a good income and little other debt.