If your income and/or savings are making homebuying a challenge, consider these options below.
1. 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 Nehemiah program, http://www.getdownpayment.com, and the AmeriDream Down Payment Assistance Program.
2. Get the seller to provide financing, called a carryback loan. In some cases, sellers may be willing to carry back all or part of the purchase price of the home and let you repay them gradually, just as you do with a mortgage.
3. 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 maintenance costs, but all the investors’ names are usually on the mortgage. There are companies that can help you find such an investor if your family can’t participate.
4. 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.
5. Make a lease-purchase offer. A lease-purchase is right for buyers who know which property they want to buy, but know that they cannot qualify for a mortgage for a certain period of months. Leasing the home for six months or more gives the buyer the chance to save more toward the downpayment or closing costs, and helps the seller earn some revenue on the house until the close of escrow. Not all sellers can or will accept a lease-purchase offer, but it can work for a seller who can wait a bit longer than normal.
6. See if you can qualify for a short-term second mortgage to give you the money to make a higher down payment. This may be possible if you have a good income and little other debt.