Student loans are making it challenging for millennials and gen Zers to save a down payment for a new home. This leaves many people feeling like paying off their loan AND saving money is nearly impossible, putting their dream of homeownership on hold. The good news is with the right strategy and determination, you can save enough for a down payment while paying off your student debt. There are also down payment assistance and zero down loans available for those with a credit score of 640 or higher.
Set a Budget
Just like any other goal you are trying to reach, you will need to have a plan in place. Determine how much money you have left over after your monthly bills are paid. How much is left for savings?
Not only will sticking to a budget help you save money for a down payment, but it will help you get in the habit of saving money when you do own a home. Perhaps your mortgage payment will be higher than your rent. Pretend that you already have a higher monthly payment and put that money aside. Plus as a homeowner, you will need to save money each month for emergency repairs and home improvements. If you can set aside this money comfortably, then you probably have a good debt to income ratio and are prepared for homeownership
Increase Your Income or Decrease Spending
If you have already set a budget and realized there just isn’t anything left over for spending, you can either spend less or earn more. This is sometimes referred to as going on the offense or the defense. Or maybe you need a little of both.
Defensive Strategy – Determine where your money is spent each month. Is it strictly on bills and necessities or are you spending a lot on extras such as dining out, trips to the salon etc? Although cutting back on things you enjoy is certainly not fun, if your heart is set on owning a home, making these sacrifices will be worth it.
Offensive Strategy – If you find that there is little money left over for savings even after sticking to a strict budget, it’s time to increase your income. Can you pick up extra hours at work? Or is there an opportunity to change your position at the company? If not, there are so many “side gigs” available today such as driving for Lyft or working right out of your own home writing or transcribing audio.
Take Advantage of Down Payment Assistance
If you have a credit score of 640 or higher you may qualify for a down payment assistance loan or even a zero down loan.
There are several loans available and each one has different terms so consult with a local mortgage expert, such as Julie Krumholz to determine which one is right for you.
For example, RD loans require zero down are determined by location of the property.
MSHDA loans offer $7,500.00 in down payment assistance but you must contribute 1% to the sales price and take a homebuyer education class
Learn More: Michigan Down Payment Assistance Programs
The Step Forward program offers $15,000 in down payment assistance – but it is for a limited time only. This program must be used in conjunction with a MSHDA loan and it available in specific locations.
Learn More: Step Forward Down Payment Assistance is Available for Michigan First Time Buyers
Contact an Oakland County Mortgage Lender for More Information
If you need more information on down payment assistance loans or you are ready to get pre-approved for a loan, contact Michigan mortgage expert, Julie Krumholz from Superior National Bank.
Julie has over 30 years in the mortgage industry and brings a wealth of knowledge to her clients. Her office is located in Clinton Township, but she can service anyone in the state of Michigan. Call Julie today at: 586-382-5482.
