• You’ve decided 2018 is the year to ramp up your homebuying savings. You’ve finally zeroed in on one of the adorable bungalows that you bookmarked online. Debbie Downer alert: To do that, you’ll need to make a down payment, which nearly three-quarters of millennials say is the biggest hurdle to homebuying, according to a June 2016 survey by TD Bank.

    But there are plenty of ways to put less than the traditional 20% down for a house, as long as you weigh the potential trade-offs. You can also use savings strategies to boost your reserves. Here’s how to make homeownership happen in 2017.

    1. Tap into low down payment programs

    Make your savings plan for the year more manageable by looking into mortgage programs that allow smaller down payments. The average first-time homebuyer put 6% down in 2016, according to a recent survey by the National Association of Realtors. In some cases, that privilege may cost you extra on your monthly mortgage. Use a mortgage calculator to weigh the pros and cons of making a down payment of less than 20%.

    Here are some mortgage program options:

    • FHA loans, guaranteed by the Federal Housing Administration, require down payments of just 3.5% of the home’s purchase price. You can get reasonable interest rates and approval even with a less-than-stellar credit score, but you’ll have to pay a mortgage insurance premium. The policy protects the lender in case you can’t repay the loan, and it will add to your upfront costs and your monthly payment for the life of the loan.
    • Government-sponsored entities Fannie Mae and Freddie Mac offer mortgages for 3% down to low- or moderate-income buyers.
    • Several conventional lenders such as Bank of America and Citibank offer mortgages with low down payments geared toward low- to moderate-income buyers. Talk to a local housing counselor about your options, and ask about state and local down payment assistance programs, too.


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