Creative Ways to Get into Your First Home

Buying a house is never a small decision. It's not only typically the biggest purchase a family makes but also fulfilling a dream of home ownership. It's this pull between the numbers and emotions that can get tricky. We want to buy a house that we can comfortably afford and love. In this market, that can be a challenge.

Interest rates on mortgages rose in 2022. On top of that, the Triangle market has been popular, and while bidding wars have cooled down, it's still competitive. In Wake and Durham; home prices rose over 18% year-over-year. If you are thinking of buying your home sometime in the next few years, here are some tips on building up your down payment and some mortgage loan options that can get you to your dream home quicker.

Building Up Your Down Payment

Saving for a down payment is no easy task, so if you're looking to start or build yours, here are some creative ways to explore.

1. Automate your savings. The first thing you should do is schedule transfers into your savings. It's a low-key way to keep you on track and make sure you're earning interest on your stash.
2. Get a roommate. If you're starting to save up and want to cut your expenses drastically, splitting costs with a roommate for a year or so may be a good solution.
3. Stay local with vacations. Everyone needs time to recharge and reset, but that doesn't mean you have to break your budget. Here in North Carolina, we have some fantastic destinations for vacations.
4. Host a yard sale. Are you looking to clear some clutter and get money in your pocket? Consider having a garage sale.
5. Side hustle on the weekends. Depending on what you enjoy, you may find a way to earn some extra money while still having a bit of fun. Do you want dogs but can't have one right now? Try pet sitting or walking for cash.
6. Stash away any windfalls. If you get a bonus, tax refund, raise, or any unexpected gifts, stash a good portion of that for your down payment.
7. Investigate local homebuyer programs. We'll get into mortgage options in a bit, but one overlooked opportunity is community-based programs for first-time home buyers. You may be able to receive assistance or a discount with buying a home in the area. 

While not all these options may apply or work for you, there could be a few game changers.

Mortgage Loan Options When You Have a Smaller Down Payment

Another way you can get into your dream home sooner is by comparing your options when it comes to mortgages. While the conventional advice is to save 20% for your down payment, you may qualify for a mortgage with a lower down payment requirement.

Loans like a USDA or VA can be a massive opportunity for eligible people as you may apply for a 100% mortgage, meaning you don't need a down payment. Keep in mind that for a USDA, the house will have to be in a rural area. VA loans can be an excellent resource for veterans looking to become homeowners.

With FHA loans, you only need to set aside a minimum of 3.5% for the down payment. The downside is that you'll have to pay mortgage insurance if your down payment is less than 10%. These loans are geared toward families with low to moderate income.

There are also numerous first-time home buyer programs that your lender may offer as well.

Whichever mortgage you go for, think long-term with your finances and make sure your mortgage payments are 30% or less of your monthly net income. That will keep it affordable and allow you to save for other family and financial goals.

Ready to Start House Hunting?

If you're ready to start saving and get on the path of home ownership, check out what Coastal has to offer. Coastal has competitive rates on savings accounts, which can help you build that down payment. You can also contact their mortgage loan officers to see which mortgage is right for you.* Finally, did you know Coastal has Daymark Realty? They're local, experienced, and knowledgeable agents who can assist you in finding a home you love within your budget.

Examine all the member perks Coastal Credit Union has to make your dream of home ownership come true!