Breaking the 20% Down Payment Myth: Pathways to Your ABQ Dream Home

Here are five ways first-time buyers can get into homes in this market.

We'd like to briefly discuss five effective ways to assist first-time homebuyers in achieving their homeownership dreams, especially in the face of rising interest rates and increasing property prices. These strategies can help them enter the housing market sooner, allowing them to benefit from the appreciation that comes with homeownership:

1. Gift from family members. One straightforward approach is for family members to provide a gift towards the down payment. It's essential to understand the specific requirements of entities like Fannie Mae, Freddie Mac, and FHA for gifted funds. By gifting a down payment, you can help the buyer transition from paying rent to building equity in their own home.

2. Down payment assistance programs. Most states offer down payment assistance programs aimed at lower-income or first-time homebuyers. To determine if your friend or family member qualifies for such programs, get in touch with us, and we can guide them through the income requirements and connect them with local mortgage lenders.

3. HomeFundIt program. This innovative approach is even more flexible than a traditional family gift. It's akin to a crowdfunding campaign for down payments. The beauty of home funding lies in its ability to accumulate contributions from various sources, even in small amounts like $50, $100, or $200. This method allows you to gather funds from different channels and save for your down payment over several years.

"You don’t need 20% down to purchase a home."

5. Short-term buydown programs. These programs allow you to have a lower interest rate for the initial one, two, or three years of homeownership. This results in a more affordable monthly payment, giving you the chance to enter the market. When interest rates become more favorable in one, two, or three years, you can refinance to maintain a lower payment.

It's crucial to debunk the myth that a 20% down payment is mandatory for first-time homebuyers. Waiting to save up such a substantial amount can cause you to miss out on significant appreciation in the housing market. The reality is that excellent loans with competitive interest rates are available with down payments as low as 3%, 5%, or 10%.

If you're a first-time homebuyer or someone looking to buy another home, we're here to offer expert guidance on strategic home buying in this market. Call or email us with any questions. We look forward to hearing from you!