As a Settlement Company, we see our clients structure the purchase of their homes in a number of different ways and we know that help in purchasing your new home is out there if you know where to look. So if “Homeownership” is one of your goals for 2023, here are some surprising sources of assistance in turning your dream into a reality:

1. Ask your employer – Contact your Human Resources (HR) department to find out whether or not your employer participates in Employer Assisted Housing (EAH) programs. These programs allow employers to assist eligible employees in owning or renting a home in a number of different ways, such as through down payment grants, deferred or low interest loans, loans that are forgiven over a period of employment, and/or counseling on the purchase and home ownership process.  

2. Ask the seller – The market is shifting and asking the seller for concessions is no longer the deal breaker it may have been during the Covid years – do not shy away from asking for closing cost assistance or a seller subsidy. Something to keep in mind, however, is there may be limits on the seller concessions you can get. A discussion with your lender and real estate agent can help you determine what these might be. If applicable, the cap on seller concessions is typically between 3-9% depending on your loan type, mortgage, and loan amount. Some sellers, such as Builders on new construction homes are even offering a buy down on your interest rate, which lowers your interest rate and monthly obligation on your mortgage.

3. Ask the government and/or organizations specializing in housing assistance – Explore down payment and/or closing cost assistance programs”. For instance, the Department of Housing and Urban Development (HUD) offers a number of home ownership programs including assistance with down payment and closing costs. HUD even has a list of links to relevant resources by state available here (https://www.hud.gov/states).

4. Ask your community – It should come as no surprise that in the age of Kickstarter and GoFundMe there are sites made specifically for crowdsourcing your home purchase – HomeFundIt and Feather the Nest are just a few examples. Many people are even using their wedding registries to collect contributions towards their down payment on a home. If you do decide to go this route, we recommend working with your lender ahead of time to determine how these funds should be documented to qualify as a “gift” rather than a “loan”. Please also note, this is not an endorsement of the named companies. We highly recommend that you research and compare the different platforms and their terms and conditions to determine which is best suited for you.  

5. Ask your family – Even if your relatives are not in a position to provide large cash gifts they can still become a co-signor on your mortgage to help you secure a better interest rate. A co-signer is distinct from a co-borrower in that a co-borrower typically shares title or ownership of the home, whereas a co-signor typically does not become a co-owner of the home. Whichever way you choose to go, with a co-signor or co-borrower, their credit history and income are factored in to boost your debt-to-income ratio and help boost your financial profile.  We highly recommend discussing the risks and benefits of any such arrangement with knowledgeable, local counsel so that the parties have a full understanding of their rights and responsibilities before entering into such an arrangement.  

6. Ask your accountant – Consult with your financial advisor and/or tax professional for advice on strategic ways of using your retirement accounts to fund your home purchase. A competent advisor can provide you with guidance on how to minimize your tax liability and/or penalties when using funds from your 401(k) or IRA accounts. For certain types of accounts you may even be able to withdraw your contributions without penalty. 

Rising mortgage rates have made it more expensive to purchase a home with a loan, but there are still so many different ways to make your dream of home ownership a reality – You just need to know where to look. An experienced realtor can be a great resource in this journey and guide you in crafting a winning team of professionals to help make your dreams of home ownership a reality.