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With student loans and credit debt at an all-time high, many first-time home buyers wonder if they’ll ever accumulate enough money to meet their down payment. Fortunately, there are ways for cash-strapped borrowers to bridge the gap. Here are some options to consider:

calculatorGrants
Check your state and local housing agencies to see if you can qualify for a down payment assistance grant. A great thing about this is that funds from a grant do not have to be paid back as long as you own and live in your home for a specific period of time.

Second Mortgages
A second mortgage in conjunction with a first mortgage is often referred to as 80/10/10 financing, a type of down payment assistance program. You provide half of the 20% down payment and the other 10% is financed by a second loan. Second mortgages typically have low or no interest rates and your payments may be deferred over a specific period of time.

Equity Share
The REX HomeBuyer program, offered by FirstREX, provides a source of down payment funding to creditworthy buyers. FirstREX will typically provide up to half the 20% down payment on a loan minimum of $417,000, in exchange for a share of the profit or loss when you decide to sell.

Tax Credits
Depending upon where you will live, certain states and local governments issue mortgage credit certificates which reduce the amount of income tax you pay. This could provide you with more available income up front to make your down payment or pay for closing costs.

Gift Funds
A gift of funds from your family and/or friends can be a great option if you’re struggling to make your down payment. Gifts of $14,000 or less are not subject to the federal gift tax. Instead of a traditional gift registry, some newlyweds are opting to register on niche sites like featherthenest.com that focus on helping people raise cash for real estate-related pursuits. Keep in mind that while there are mortgage options that allow you to use gift funds to make your entire down payment, some may require you to contribute at least 5% of the down payment with your own funds.

Employer Buyer Assistance Programs
Many organizations, such as universities, municipal agencies, and corporations, offer home buying assistance programs to employees. To see if your employer offers down payment assistance plans, speak with your Human Resources representative.

Contact a loan advisor near you to review your options and find the solution that is best for you.