Frederick County Short Sale Blog | Homes for Sale in Frederick Md

How Can I Pay for Closing Costs on my Frederick Home Purchase?

Many people who would like to be in the market to buy a new home are wondering where they will get the money for a downpayment.  With gas prices, inflation, and increased taxes, the average American's savings are at the lowest in 75 years.  As of October 1, sellers can no longer contribute to the buyer's closing costs on an FHA loan.  There are ways to get closing cost help which are allowable by FHA: 

FHA will allow for a homebuyer to receive the down payment as a "Gift" from a family member or non-profit organization.  There are county and state non-profit programs which you may qualify for.  If you are receiving a gift, you must provide the complete papertrail of the money, including the giver's bank statement, to prove they had it to give. 

There are several non-profit sources for closing cost help.  Many employers offer programs that match funds, city, county, and state employees have access to programs, SELP is a Maryland program, as well as the CDA program of Maryland.

 Grant America Program is a is a government grant program that provides anyone who qualifies for an FHA loan with a down payment grant to be used towards the purchase of a home.  Family Home Providers is a non-profit gift program for those who qualify for an FHA loan.  The US Dept. of Housing and Urban Development has lists of programs that assist with downpayment costs.

Additionally, if you have a 401K or retirement account, you may be able to draw or borrow from these funds for your down payment. The minimum amount allowable is $10,000, the max is $50,000. If you must borrow against an account, you must be able to qualify with the monthly repayment amount.  There are pros and cons to borrowing from your 401K.

If you are buying a home with a conventional loan, then there are no laws keeping the seller from contributing to closing costs.  Different loan programs have different allowances, though, so you'll want to shop around.  I read a statistic recently that said that the average consumer spends 15 hours in research when buying a car, and only 5 hours in research when shopping for a home loan.