If you’re looking to purchase a home, you probably know that the more down payment you can make, the higher the mortgage you can qualify for. Moreover, that will also make your buying process less complicated. But that doesn’t necessarily mean that you can’t purchase a home if you have limited funds and can’t get approval to borrow as much as you may want. So, do you feel your financial instability limits your ability to own a home? Here are some tips for buying a home on a limited budget.
Decide on your priorities
If there’s anything you want to avoid, it is shopping based on your emotions. You know your funds are limited, so the first thing you need to do is decide on the home features that are most important to you. This way, you can narrow down your search and increase your chances of finding affordable options. Start by identifying what your first three priorities are in your preferred future home. For example, do you want a backyard space for a small garden or an open floor plan? The narrower your search is, the easier it is to find suitable options.
Consider a foreclosure or a short sale
A foreclosure or short sale can help you grab a suitable property at a low price. With a foreclosure, a bank reclaims the property due to failure by the previous owner to fulfill their mortgage agreement. And because banks or lenders usually want to offload foreclosures quickly, you can snag a property at an affordable price.
The lender or seller is usually willing to let the property go with a short sale, even on a mortgage or underwater. The lender is also ready to accept what they can get from the sales and the mortgage payoff. And because most of these lenders are in a hurry to get rid of the property, they usually end up accepting low-price offers.
Consider down payment assistance
Find out if you can benefit from a down payment assistance (DPA) program in your location. DPA programs help make it possible for hopeful home buyers with limited funds to cover all or a part of their down payment costs. Moreover, some of the DPA programs can also assist with closing costs. Combining down payment assistance with a mortgage quote is a significant step towards acquiring your home.
Get ready to make some compromises
Almost everybody will love to own a luxurious home with all the luster and features they dream about. But if you have a limited budget, you’ve got to make some compromises, and there’s no way around it. However, it would help if you separated compromises you could correct later from the permanent ones. For example, if you find an affordable home with an outdated kitchen without cabinets, that’s something you can fix later on. But if you need a three-bedroom home because you expect to expand your family, buying a two-bedroom house wouldn’t be the best decision.