It’s clear that not many new home buyers have enough savings for a down payment loan. When homebuyer’s savings are null, homebuyers are receiving family money to help with their down payments. Gift funds are helping the younger couples to have the amount of cash liquid to own a home.
KPCC-Southern California Public Radio in 2018 analyzed eight years of statewide data from the Federal Housing Administration (FHA) loans, government-backed mortgages, that require lower down payments and credit scores for low- and moderate-income buyers.
The analysis shows increasing numbers of homebuyers are receiving funds from relatives — from the Bay Area to San Diego.
KPCC provided San Luis Obispo County numbers from 2011 through May 2018, and The Tribune analyzed the remaining FHA loans through May 2019. The data shows about 27% of local homebuyers who took advantage of an FHA loan received down payment assistance from relatives in 2011. That number grew to 40% by the end of 2018 and reached 41% by May 2019.
Here are the tips:
• Having a family income of $100,000 per year is not good enough to buy a home. You need to have enough savings for the downpayment.
• A 20% downpayment is the recommendable saving, especially because you will avoid private mortgage insurance.
• For lower downpayment, there are several assistance programs but they require the family to have at least 3% downpayment. These families will have higher monthly payments due to the lack of savings.
• Instead of buying new cars, new TVs, or doing the last trip to Asia or Europe, think twice that these expenses jeopardize your housing plan for several years.
• Moving out of Los Angeles, will not help too much if you don’t have enough savings for the loan.
Find more homes for sale near your neighborhood here.
Source: How do first-time homebuyers afford SLO County prices?