A Down Payment Dilemma

by Cape Cod Home Buyer from Massachusetts

Dear Kate, I am a home buyer with a down payment dilemma. I have an exceptional 800 credit score with a long history of excellent credit, no credit card debt, an auto loan through my credit union with $6800 remaining and a salary ranging between $85,000 to $100,000.

A Down Payment Dilemma
I have had to ride out the last 9 years of home ownership because houses on Cape Cod were just too expensive. A run down three bedroom home could easily cost $750,000 so purchasing was just not possible.

Now, house prices are falling but in this land of second homes, the population at large is unwilling to accept that homes they could sell for $600,000 just a year ago, are now in the $450,000 range. So homes are not selling that quickly here.

Having said that, a 20% down payment is tough to come up with. Essentially, a $350,000 home means a $70,000 down payment, $8,000 to close, and another few thousand to actually move from one place to another.

I am no credit risk at all. I have a lifetime of always paying my bills. I do not live beyond my means. I am conservative. Even my fully loaded jeep was l year old when I bought it.

Yet, it is so hard to gather such a large chunk of money while still paying all the bills for everyday living like rent and utilities.

Is there a bank which values a customer like myself and will approve me with less than 20% down payment?

Kate Answers: A Down Payment Dilemma

Dear Cape Cod Home Buyer, Thank you for writing to Ask Kate. I have answered your down payment question at Finding Low Down Payment Mortgage Financing.

Best wishes,

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Buying and selling houses...
by: Chaitan from Richmond, VA

Kate, Can the sale of a home act as income or assist in the buying of a new home? Chaitan

Hi Chaitan, Kate here.

In general, the proceeds from selling a home are not counted as income by mortgage lenders because the income is not ongoing. In other words, a one-time lump sum is rarely considered income.

However, the proceeds can be used as a downpayment when buying your next house.

One more thought. If your question pertains to income tax, please consult a CPA for your answer.

Best wishes, Kate

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