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    As home prices creep upward, down payments do too.

    Even loans with minimal down payment requirements can be hard for many buyers to scrounge up. For example, on a $200,000 home, a 5% down payment is $10,000. But if that home goes up to $250,000 in price? That 5% down payment would just to $12,500 — a pricy $2,500 more.

    Fortunately, there are programs that can help offset or even cover the costs of your down payment entirely — especially if you’re lower-income or face other financial difficulties.

    How to Save for Your Down Payment

    As you’re dreaming about your new home, you’re likely saving for the down payment. It actually may not be as difficult as you think. There are many programs and resources available to help home buyers with their down payments.

    But, faced with rising home prices (meaning a larger down payment is required), plus surging student loan debt, many buyers can barely save at all — let alone enough to buy their dream house.

    So what do they do? They get creative. They use apps, seek out the help of friends and family, and flip the script on age-old traditions.

    1. Crowdfund it

    Crowdfunding isn’t just for helping your college buddy get his new brewery off the ground. More and more, people are using sites like GoFundMe, Kickstarter, and YouCaring to raise funds for down payments and home improvement projects.

    There’s even a crowdfunding site dedicated specifically to down payments now, called HomeFundIt.

    2. Ask for donations

    Feather the Nest and HoneyFund allow engaged couples to ask for down payment donations (as well as donations for honeymoons, excursions, and other items) in lieu of traditional wedding gifts.

    Think of it like fundraising meets a gift registry. Instead of china and bakeware, the couple gets cash toward their dream home and can save for a down payment.

    3. Use savings apps

    There are tons of apps out there that help you automate your savings — either a set amount every month or portion of your transactions.

    Some even take your savings and invest them in different portfolios, so your money actually makes you money. Popular app options include AcornsDigitChime, and Mint.

    4. Leveraging round-off programs

    Programs like Bank of America’s “Keep the Change” allow you to stow away big bucks without making any real change to your saving and spending habits.

    The tool simply rounds off your purchases to the nearest dollar, and then sticks that extra cash into a savings account. (Example: You buy gum for 75 cents. It gets processed as $1, and the extra 25 cents goes into savings.)

    4. Join the gig economy

    Gig jobs like driving for Uber or Lyft, shopping for Shipt, or running errands for Favor make it easy to add extra income without committing too much time or energy.

    Increasingly, home buyers are using these easy second jobs to save up cash for their down payments and other up-front costs.

    5. Receive a gift

    Who doesn’t love a gift? Especially when it’s in the form of cash for your new home! Homebuyers can use money provided as a gift as part or all of their down payment.

    Gifts can come from family members or their fiancé / significant other. Non-relatives may also be able to provide a gift for this purpose, but the rules tend to be more restrictive.

    Check the loan type for specific rules around using gifts for down payments.

    6. FHA Bridal Registry

    These days, many couples are living together before getting married. They have dishes, towels, all the comforts of home already.

    They may be ready for the next step—homeownership. Couples can create this savings account with the FHA and family and friends can make deposits toward their down payment on their home.

    This federal program was set up for newlyweds looking to purchase their first home, but it really extends to any occasion where people typically give significant gifts.

    7. Borrow money from retirement plans

    First-time homebuyers are allowed by the IRS to use up to $10,000 of their IRA funds as a down payment. Those with a 401(k) savings plan may be able to borrow against it, but you’ll need to repay it.

    8. Sell some personal property

    Do you still have that motorcycle collecting dust? Maybe you have an old collection of stamps that you’d like to cash in. Consider selling items to make a few bucks.

    There are many ways to come up with your down payment. Get creative! Do your research and ask questions. Sometimes the money is out there for you to find—you just have to look for it.

    How to Save for a Down Payment with Irregular Income

    A down payment goal is made even tougher when you have an irregular income. That said, it’s nowhere near impossible to achieve. Even those of us who have an income that ebbs and flows have the ability to become homeowners.

    If you are self-employed, a freelancer, or otherwise have an up-and-down income, keep reading. Below are some of the best tips on how to save for a down payment with an irregular income. If you follow them, you’ll be ready to start house hunting before you know it.

    Make room for your new savings goal in your budget

    Whenever you have a new financial goal in mind, the first step is to make a plan for how to go about achieving it. Usually, part of that plan involves readjusting how you allocate your income and this time is no exception. If your goal is to save for a down payment, you need to make room for that saving in your budget.

    If you have an irregular income, your budget will likely be based on the average amount that you bring home per month. While some months may be higher or lower than average, you should still be able to tell how much of your income typically goes toward covering essential expenses like your rent and student loans versus discretionary spending.

    In this case, you’ll want to look at your how much of your discretionary spending — or the amount you spend on non-essentials — you can begin to put towards saving for your down payment instead. Once you have that number in mind, make it into your savings goal. In other words, aim to put that amount aside each month.

    Be flexible with your goals

    When you have an irregular income, it’s important to remember that goals aren’t set in stone. Some months, you may not have enough disposable income to fund your savings goal and that’s okay. Try not to beat yourself up if your income dictates that you can only put a small amount aside.

    That said, if at all possible, do your best not to let an entire month pass by without putting anything aside for your down payment. Once you do that, it’s far to easy to get in the habit of not saving anything at all. Make a promise to yourself to put some amount of money aside every month, even if it’s smaller than you originally anticipated.

    Put windfalls to good use

    On the other end of the spectrum, don’t hesitate to put windfalls to good use either. If you have a particularly good month, push yourself to set aside more money than you normally would. Doing so will help you reach your goals faster and help create a buffer for months when your income is lower than normal.

    The same can be said for any additional money that you earn that’s out of the ordinary. If, for example, you end up getting some money refunded from an over-payment on your taxes or you start a side hustle, you may want to consider adding those funds to your savings as well.

    Try a savings app

    It may not be the best idea to automate your savings entirely when you have an irregular income. (Overdraft fees, anyone?) However, if you’re not the best at putting money aside, you may want to think about using a savings app to help you make progress. In particular, apps that “round up” your spending to the nearest dollar and move the change into a savings account are a good bet.

    With this method, you don’t really have to think about saving. It just happens. Since you’re only saving a few cents at a time, you may not see as much progress as someone who is purposely putting aside hundreds of dollars each month. But rest assured that your savings will start to add up over time. Ideally, without you even noticing a substantial change in your monthly spending.

    Try not to spend it

    Lastly, in order to succeed at saving for your down payment, you have to make an effort not to spend the money you’ve already put aside. Particularly in down months, it can be tempting to dip into your savings fund in order to soften the blow. However, the quickest way for you to grow your savings to the size required for a down payment is to leave it be.

    If you need some help staying out of your savings, think about opening an account at a different bank. You’ll still be able to access the money, if needed. However, the transfer process will take a bit longer, which will make it easier for you to think twice before transferring the funds.

    Down Payment Assistance Resources

    Are you hoping to buy a home but don’t have enough for a down payment? Here are some resources that can help.

    Low home down payment programs or no-down mortgage loans

    There are also several mortgage loans that require no down payment at all. One option is the USDA loan. These are often called rural home loans since they require you to live in less-populated parts of the country.

    They come with low interest rates, and you’ll need zero down payment. If you or your spouse is a military member or veteran, VA loans are also a no-down option you can explore.

    Down payment assistance programs

    Many states, cities, counties and even local nonprofit organizations offer down payment assistance programs. These can sometimes even be used toward closing costs—another big expense for soon-to-be homeowners.

    Typically, down payment assistance programs operate like debt-free loans; you won’t need to pay them back right away, but there will be a plan for how you’ll do so in the future.

    • State housing agencies: Most state housing departments have down payment assistance programs and even grants to help you cover closing costs. Head to the National Council of State Housing Agencies’ website to find the agency for where you live.
    • City housing and community development departments: Many large cities also offer homebuyer assistance. In Houston, for example, the city offers up to $30,000 in assistance for those with qualifying income (80% or less than the area median). 

    Grants

    You may also be able to get grants to put toward your down payment through certain state and federal programs. The big benefit of these is that they’re treated like gifts—you don’t have to pay them back at any time.

    Embrace’s Wider Path Home Foundation is dedicated to helping prospective homebuyers better understand the path to homeownership and manage the costs of it. If you need assistance, you can head to the group’s resources page to find non-profit agencies, grant programs, housing agencies, and other programs that can help.

    Bottom Line on Saving for a Down Payment

    Down payment programs are sometimes offered as low-interest second mortgage loans, forgivable loans, or, in some cases, grants — meaning they won’t need to be repaid at all. Make sure you understand the repayment terms of any assistance program you apply for or reach out to a HUD housing counselor for more guidance.

    You can also connect with an Embrace Home Loans representative in your area, and they can recommend down payment programs (and other forms of assistance) that might be applicable in your case. They can also help you work through various loan scenarios to find the right financing option for your home purchase.

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