News & Trends

Saving for a Down Payment

Saving up for a down payment to buy a home may seem daunting. Depending on the lender and loan type, your down payment may be 10% to 20% of the home purchase price, while some loans require as little as 3% down, subject to qualifications. However, a down payment of at least 20% may relieve you from carrying private mortgage insurance. Whatever your scenario or motivation, there are actions you can take to position yourself financially to purchase the home you want.

Review your credit standing.
Check your credit score and take steps to improve it if necessary. Eliminate as much debt as you can because higher credit scores generally translate into lower loan interest rates.

Crank up the discipline.
Consider giving up a few things each month – your morning iced mocha, tickets to the big game or even that long-planned beach trip. Limiting your spending to the essentials can have a significant impact on your savings.

Make lifestyle changes.
Consider downsizing your current living arrangement, if that is an option. Carpool, take public transportation or drive a car with a lower car payment.

Borrow from your 401(k).
Did you know you can borrow as much as half of your 401(k) balance up to $50,000 at any age without facing a tax penalty from the IRS? If you’ve been taking advantage of your company’s 401(k) match program and you’re ready to invest in a home, it may be worth the risk.

Keep in mind after borrowing from your retirement account, typically you have to repay the loan within five years. However, some employers will allow up to 15 years if you’re trying to complete a down payment for a home loan. If you lose your job or change companies, you will need to pay back the loan to avoid it becoming taxable income.

Dip into your IRA.
You can also withdraw up to $10,000 from your traditional or Roth IRA. So, if you and your spouse both have IRAs, you could potentially contribute as much as $20,000. This can be taken out tax- and penalty-free provided you’ve had the IRA for at least five years. Otherwise, you will incur taxes and a penalty.

Take advantage of special programs.
Ask your Realtor® if you may be eligible for homeowner grants or first-time homebuyer assistance programs. In the Lone Star State, Texas State Affordable Housing Corporation offers down payment assistance and loan programs. Homes for Texas Heroes Home Loan Program provides help to qualified teachers, firefighters and EMS personnel, police and correctional officers, and veterans. For low- and moderate-income households, Homes Sweet Texas Home Loan Program also provides a down payment grant, based on to 3-5% of the amount loaned.

 Ready to find the perfect new home in one of our Austin or Houston communities? Explore financing options for your new Trendmaker home through TRI Pointe Connect® . Our New Home Specialist, Kim Bennett, would be happy to help if you have any questions regarding TRI Pointe Connect or the homebuying process.







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