7 Alternative Ways Millennial Homebuyers are Saving for a Down Payment

Here are a few alternative ways millennials, just like you, can save-up for their down payment and continue pursuing their dreams of homeownership.

See if you qualify for a down payment assistance program.

At Envoy, we offer many programs specifically tailored to millennial and first time homebuyers. Chat with your loan originator about state funded down payment assistance programs, FHA and VA loans, where homebuyers can put as little as 3.5% down!

Use your inheritance or a gift fund.

Many millennials use gift funds transferred by family members to afford their down payment. If you already have proof of income and a strong credit score, you can use this money for a down payment on a home, but there are some guidelines.

Here are some questions to ask your loan originator:

• What kind of documentation is required?
• Can the donor be of any relation to me?
• What is my mortgage gift funds limit?
• Do I have to pay any money out of pocket based on my credit score?
• Can I use gift funds for closing costs?
• Is there a gift fund tax I will have to pay?

Start a side hustle.

Remember that hobby you’re really good at? Well, maybe now is the time to start a side business and start making some profits. A side hustle can create a nice sum of cash to put towards a larger down payment in order to make yourself appear more attractive to sellers.

Cash-in your savings bonds.

A savings bond is basically an IOU from Uncle Sam. You technically loan the government money and then when you redeem the bond, the government pays you back with interest! If you placed any birthday money from your aunts, uncles or grandparents into a bond, you probably have a sizeable sum saved by now. Don’t forget to check your savings bonds value and use this against the down payment on your new home.

Think about buying a house with a friend.

Most millennials opt to get married later in life and choose to purchase a home with a friend to help offset costs. Since most homeowners stay in their first home for approximately seven years, co-purchasing is a smart decision if you are ready to stop renting. Remember, if a major life event happens, you can always sell the home and collect the money.

Purchase a rent to own home.

Since you already spend your monthly paycheck on rent, why not rent a home that you can eventually own? Just be sure to check the rent to own agreement before you sign the contract to see if there is an option to purchase the home before the lease expires. A rent to own home is a great way to invest your money into your future home and avoid the down payment and increase your credit score until the lease expires.

Iron out your credit score.

Clean up your credit score and expunge errors with a credit repair specialist, so you can boost your credit score, lower your interest rates and make your down payment a little more affordable.

The best way to save for a down payment is to adjust your lifestyle and set personal goals. Only you can decide which amenities you are willing to live without for a short time. We recommend curating a lifestyle that sparks joy and allows you to afford a home at the same time.