Coming up with a down payment can be a daunting task. Assuming a standard down payment of 20% on a $300,000 home, for instance, would be $60,000. And if that number feels outside of anything you could ever dream of saving, don’t worry, you’re not alone. Affording a down payment is one of the largest concerns for first time home buyers who do not have the luxury of the equity built into a home that is currently owned.

There are a number of down payment assistance options both from local and state agencies as well as private third parties, which can help lower the initial shock of such a large sum of money required all at once. Unfortunately, most of these are difficult to qualify for, have onerous applications, and long wait times. Most of the federal programs have long since expired, as well, leaving the burden on the state for government help.

That being said, there are a number of ways to get assistance. For some, it is through the MSHDA, which is the Michigan State Housing Development Authority, which runs a number of programs to help first time homeowners buy a home. For others, it is by taking a loan against a 401k. 401ks are generally not accessible, but many large companies offer loans against them for specific purposes, and the purchase of a home is almost always one of them.

And finally, and perhaps easiest, you can simply put less down. Now, this is not “assistance” in the traditional sense, but taking that same $300,000 home, if you only put down 3% to qualify for a conventional loan, you would only need $9,000. The downside to smaller down payments is the potential for mortgage insurance, but given the historically low rates we are seeing, it could be worth paying the insurance for a few years to ensure you have the best rate possible over the next 30; waiting 5 years to save up the 20% to put down could mean waiting until interest rates return to the 7% range, costing you tremendously more in the long run.

Ultimately if you are in the market for a new house, your best option is to contact a qualified mortgage officer with a deep understanding of all of the available down payment options here in Michigan. You can discuss the size of the down payment you will need, if you qualify for any assistance, and what the process is for obtaining said assistance.

If you have any questions about down payment assistance or getting prequalified for a mortgage, please contact me. If you have anything to add about down payment assistance programs, please leave a comment.