How to save for a down payment on a home?
Answer:First time home buyers often have difficulties saving for a down payment on a home. Even though it is possible to get a no down payment mortgage, or use down payment assistance grants, a borrower is typically expected to save for:
- down payment;
- closing costs as house appraisal, title check, lender / broker fee, escrow funds;
- several months' mortgage payment reserves.
It is possible to possible to reduce the amount to save for a down payment on a home by having the lender or seller finance some of the costs, use a local down payment assistance program (DPAP), or obtain gift funds from relatives.
If you decide to finance a down payment and closing costs on your own, you should save for at least 5% of the loan amount for down payment, and some other 5% of the loan amount for closing costs and several months' reserves.
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