Down Payments
One of the components a lender uses to help determine what loan amount to approve is your down paymentA down payment not only serves as a commitment on a borrower’s behalf to make good on a home loan, but acts as a lender’s guarantee to minimize risk in case a borrower defaults on a loan. The more of your own cash that you can put down for a loan, the easier it is to qualify for a higher loan amount or a lower mortgage payment.
Alternative sources of funding
Since most borrowers do not have large cash reserves on-hand for a down payment, there are other alternative sources for funding. Besides tapping into your own savings accounts, other resources may include friends, relatives, 401(k) plans, proceeds from stock sales, appraised assets, even a co-signer.
Many cities, looking to expand their communities, even offer their own down payment subsidy programs for cash-strapped buyers. It’s not uncommon to be gifted $5,000 to $10,000 without expectation of re-payment.
