Thanks all for the input. We do make enough money to be comfortable. We saved up a lot for our wedding and then spent it all on that. We took the money from wedding gifts and paid of our credit cards, so we have no debt but student loans. We just want to move in december and we wont be able to save a substantial amount by then. I guess we’ll see what happens…
i have done 3 or 4 closings where the buyers used grant monies as their down payment.
only one had to be repaid, and that was on a sliding scale based upon how many years the home was owned and owner occupied. if the homeowner retained the property for 10 years, there would be no repayment.
the HUD website should have a section on this. or your state’s website should have a section on assistance available for first time buyers.
I’m not completely sure on all the details, but you may be able to use money from your IRA for a down payment.
The way it was described to me, is that if you are purchasing your first home (which it sounds like you are), and you have money squirreled away into an IRA / 401k (I’m not sure whether all types qualify), then you can withdraw money from your retirement fund (I’m not sure if there’s a max withdrawal) without paying early withdrawal fees or taxes on the withdrawn money.
Obviously you should consult with a financial advisor for the details, but it may be an option you can use.
I have an 80/20 loan on my house that I purchased a year ago. It’s a great deal. One loan is for the mortgage and it’s a fixed rate loan. The second loan was to pay for the 20% down payment. This one is an adjustable rate equity line. The great thing about this is that the more you pay on the equity line, the more money that is available to borrow back in case you need to fix something around the house. It operates like a credit card. The beauty of it too is that you are only obligated to pay the interest on that loan each month. So if you’re having a rough month financially just pay the interest and you’re good to go. Of course if you can afford to, pay as much above the interest payment as you can because every penny you pay above that interest amount goes directly to the principal and raises your equity line. Also, this type of loan has no PMI.
Look into it because as it’s been stated above, not putting a down payment on a house is not a good idea.
But isn’t this pretty much equivalent to a >80% loan and paying PMI? Since the second loan has a higher rate, that costs you more. The advantage of this system, however, is that you can pay off that 20% loan first, while if you just had a single loan, you’d have to re-do some paperwork in order to get rid of the PMI when your principal falls off below 80%.
Jorge, I’ve been a homeowner for 20 years, and I’d urge you to reconsider your motivations for homeownership. My guess is that you’re feeling like you’re missing out, right? The problem is that house prices are at very high values in much of the country, and it’s doubtful whether they’ll continue to rise. Basically, what you’re looking at is buying while the market is likely to be at a peak. Consider any home purchase now to be a risky investment, so don’t over-extend yourself to get into it.
My first house, which I lived in for six years, appreciated zero. My second house, in ten years, appreciated about 20%. My third house, which I’ve owned since 2001, has maybe appreciated 10%. I’ve enjoyed living in them, but if it were simply an investment, these are very bad returns compared to other markets.
No, because while the second loan is higher, the difference is still a lot less than PMI would be (I have an 80/10 loan).
Plus the interest is tax deductible and PMI is not.
Yep, you can generally withdraw up to $10K without paying early withdrawal fees. This works for both 401ks and IRAs, but I’m not sure how it would work if you had one of each and wanted to pull a total of $20K out.
Obviously still good advice.
But if I recall, when you borrow against your 401k, that money has to be paid back into your plan within 12 months. So, that may not be the best solution for everyone.
My first house was a HUD mini-down. My down payment was 250, or less than 1%. The house was a wreck-barely habitable. Working on those projects which brought up the value quickly with a minimal investment of (lots of work), I was able to get the place reappraised after only a few years, and was out from under the PMI. Check to see if there are any sweetheart deals for first time homebuyers, particularly for undervalued properties, if you’re handy and willing to bust hiney, that is. 
Good luck.
I don’t think that this is true. I think you have longer to pay it back if it is used for a house. I know when I took out some money from my 401k for our house we paid it back over 5 years.
This was our experience, too. It may depend on the 401k, it may be that it was because the loan was for a house. We took about 2 1/2 years to pay our down payment back to ourselves.
My company’s 401(k) allows loans for purposes of buying a house to be paid back over a much longer period - IIRC something like 15 years. Of course, if you leave the company within that period and can’t pay back the loan, I believe it’s treated for tax purposes as an early withdrawal.
Moved to IMHO from GQ.
This thread, while full of factual advice, is still about opinions.
Reluctantly, moved.
samclem GQ moderator