A Better Alternative to a Huge Down Payment

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Typically, the biggest hurdle that most homebuyers face when looking for property is the down payment. Once you have established some equity in an existing home, a down payment is usually not that big of deal, especially since you can roll the equity into a large down payment on your next home. But getting started in the real estate market could take thousands of dollars, not something a lot of first-time buyers have on hand. So what happened if you want to buy a home get don't have a large down payment? There are alternatives.

Even if you don't have perfect credit, you can still buy a home with several alternatives.


An FHA loan allows you to buy a property with as little as 3.5% down. On a $300,000 home, however, that still over $10,000, a large chunk of money for first-time homebuyers. There are home-buying assistance programs, closing cost and down payment assistance programs, and creative financings such as through a USDA loan or VA loan if you are an active or former military personnel. There are catches, however to an FHA loan. Most of these require private mortgage insurance because there's just not enough equity right off the bat to cover in case the borrower defaults.

Another option would be divvy.

Divvy is a unique option for both renting and homeownership. Divvy buyers of the home on your behalf and as soon as the closing process is complete you can move in. You can make monthly payments until you're ready to buy the home from divvy, simply use it as a rental, or your payments can include a portion that goes to your future home savings.

While people have been doing this personally for decades, this is really one of the only major businesses that do it for potential homebuyers. After three years of living in the home or even before, borrowers have an option to buy the part and divvy will count a portion of each monthly payment as savings toward equity. So, after three years, if you've built up enough for about 10% down, you can buy the home from divvy free and clear.

Borrowers considering this type of purchase need to find out if there prequalified. It's not available in every state but there are similar programs in California, however, most of these programs still require borrowers to put down about 1% to 2% at closing.

Most first-time buyers are surprised that they can actually get a loan. But, many of them don't even call to see if they qualify. Because we work with homebuyers, refinance options, and have access to all of the listings throughout Palm Springs and Palm Desert areas, we can help you find the right home and the right loan to fit your needs regardless of your credit history or current down payment. There are so many different options these days that we're likely to find a program for you or, give you a short plan of action so that you can be a homeowner in less than 12 months.

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