Saving up for a large enough down payment is one of the biggest obstacles to acquiring a mortgage, right up there with repairing your credit history and boosting your credit score. The National Association of Realtors' 2020 Home Buyer and Seller Generational Trends Report found that almost one in ten purchasers found saving for a down payment to be the most challenging aspect of the home-buying process.

One study found that among purchasers aged 29 and under, 30% said they had the worst time saving for a down payment. Another study found that saving up for a home's down payment was the #1 worry of millennial homebuyers. Half of the young adults in a recent Redfin poll named that as the biggest challenge they face.

How About Crowdfunding That Down Payment?

Crowdfunding websites may be useful tools for aspiring company owners seeking startup capital and charitable groups seeking to raise money for an upcoming project. This idea applies to various private pursuits, including buying a house. From CMG Financial, the mortgage banking industry's "first industry-approved crowdfunding solution offering house purchasers the support, information, and platform they need to crowdfund a mortgage down payment" is HomeFundIt.

Using Crowdfunding to Pay the First Mortgage Payment

After signing up with HomeFundIt, users are prompted to fill out a mortgage prequalification application. If successful, they can start a crowdfunding campaign for their down payment. Buyers who utilize HomeFundIt will also be reimbursed for the cost of a homebuyer education course.

HomeFundIt will double the amount raised through Crowdfunding by qualifying purchasers who make less than the area median income, up to $2,500 or 1% of the purchase price, whichever is smaller. Those with incomes above the median can receive a discount of 2% of the purchase price for every $1 crowdfunded, up to a maximum of $1,000.

Reasons Why It Matters How Much You Put Down

If you want to get off to a good financial foot as a homeowner, put as much money as possible into your down payment. If you can save and crowdfund enough money for a 20% down payment, you will likely get a better mortgage interest rate and avoid having to pay for mortgage insurance.

The down payment for a house may be increased by using strategies like automated savings and crowdsourcing, as well as by saving any windfalls like a bonus or tax refund.

Tips For Successfully Crowdfunding Your Home's Down Payment

Interested in making your first real estate purchase? There is a lot to consider, the most crucial of which is where you will get the money for the down payment. Young people often face difficulties purchasing homes because of the large down payment required.

There are options for first-time buyers, such as down payment help and first-time homebuyer subsidies, but eligibility standards might be stringent. Crowdfunding is a novel alternative that might help with the down payment.

If It Can Be Done Faster, Buy A Home

The hardest aspect of buying a house is most likely going to be saving up for the down payment. There are a lot of folks who can comfortably afford a mortgage payment every month. In many parts of the country, buying a home is more affordable than renting.

To put together the 10% or 20% down payment might be difficult. Individuals who can afford a mortgage but haven't saved enough money for a down payment may want to consider Crowdfunding as an alternative.

Don't: No Down Payment

If you have some cash you can use for a down payment but want to put down more money, Crowdfunding is an excellent option to consider. It might not be easy to save enough money for a down payment on a new house, and you may not succeed.

Do: If You Have Several Helpers

Before, the only sources of giving money for a down payment were immediate family, a company, a religious institution, or a local charity. It was also necessary to provide proof that the down payment aid was a gift and not a loan. The borrower's ability to repay the mortgage was a primary concern for the lending institution.

Don't: If You're Busy

Crowdfunding might be a danger if you need to buy a house quickly so you can move in before a certain date. You may have to scramble to find new housing or make up the difference if you don't get your money in time. Those with some leeway in their budgets can consider a crowdfunding campaign to raise funds needed for a down payment.