Mortgage Expert John Veenstra: Sources of Money

Many potential Homebuyers have the necessary Qualifying Income, however, do not have the money needed to cover down payment and closing costs. Having savings to cover some or all the money needed is a good start, however, many find saving enough difficult with all the day to day expenses.
MINIMUM DOWN PAYMENT The minimum down payment for FHA mortgages is 3.50% of the purchase price. The minimum down payment for CONVENTIONAL mortgages is 3.000%.
Money for the DOWN PAYMENT can come from several sources:
1. Personal savings
2. Gift from a relative
Note: If buying from a relative, the entire down payment and all closing costs May be a Gift. The entire purchase with no money spent by the Buyer. 3. Grant (there is one 2% Grant available with FHA mortgage)
4. Selling personal asset(s)
5. Cash value of life insurance
6. Borrow or withdraw form retirement accounts
CLOSING COSTS Closing costs vary depending on the purchase price, mortgage amount, property taxes and property location.
Money for CLOSING COSTS can come from:
1. All the sources named above
2. Seller can pay some or all of the costs
3. Lender can pay some or all of the costs.
4. Credit card for the appraisal and maybe the home insurance first year premium
The information above is not intended to make everyone a mortgage expert. The purpose is to let you know that all of the money does not need to come from personal savings. If one has the income and the credit, the money needed could be readily available with a minimum down payment and one or a combination of some of the sources noted above. This could be an important and worthwhile discussion to have with a Mortgage loan Officer.
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