Mortgage Down Payment Myth Busters
20% Down Payment is Not Required
Many people still think that they need to have 20% of the purchase price saved up in order to buy a home – this is not true. At Wells Fargo, the minimum down payment for most people is 3% and there are programs that do not require a down payment. It is also acceptable for the funds to come from a gift from a family member for many loan types.
Down Payment Assistance Is Available
Non-profit agencies such as the North Carolina Housing Finance Agency provide funds for the down payment in the form of a “soft-second” mortgage. The funds only have to be paid back if the home is sold within a certain period of time (varies depending on the program). Most of these programs have income and/or price restrictions. Another program, Wells Fargo Neighborhood Lift, provides up to $7,500 to help with down payment for qualified buyers. The funds are through a charitable donation and are available until they run out.
Gifts and Taxes
Sometimes, a parent or family member is concerned about how much money they can give to another family member without being taxed. Often they think it is $14,000 per year. This is also not true. The donor pays no tax penalty unless they give over 5,490,000. For the vast majority of people this will never be an issue. Here is a link to the IRS site with the updated gift tax rules.
Please feel free to call me if you have any questions about down payment requirements or general mortgage information. I would be happy to explore your options and show you how easy it can be to purchase a home!
Connie A. Tench
Home Mortgage Consultant
Wells Fargo Home Mortgage