Creative ways to buy a home in today’s market
If you’re struggling to purchase your first home, you probably aren’t alone. The good news is that there are several ways to buy a home that can make ownership more achievable, even in a challenging market.
Down payment help
One of the biggest barriers to homeownership remains the upfront costs, specifically the down payment and closing costs. If you’re still struggling to save enough, here are some options for down payment assistance that might help.
Chase affordability programs
It’s a common misconception, but you don’t always need 20% down to afford a home. With both the Chase DreaMaker℠ mortgage and the standard agency mortgage, it’s possible to qualify for an affordable home loan with as little as 3% down. This is even lower than the requirement for some government-backed loans, like Federal Housing Administration (FHA) loans.
In select areas, homebuyers may also qualify for the Chase Homebuyer Grant, which provides $2,500 or $5,000 in savings. These funds are first applied to help lower your interest rate, but it is possible for them to be applied to your down payment. Contact a Chase Home Lending Advisor (HLA) for more details.
“The Chase DreaMaker program offers significant benefits to clients seeking greater home purchase affordability. With a reduced monthly PMI and the removal of loan level pricing adjustments to the interest rate, clients enjoy lower monthly payments. Additionally, the program allows for down payments as low as 3%, making it easier for clients to afford the initial costs of homeownership. When the DreaMaker product is paired with a Chase Homebuyer Grant-eligible property, clients benefit from both a lower monthly payment and a highly affordable cash-to-close amount, making the path to homeownership more accessible and manageable.”
- Shawn Leverette, Columbus, OH
Local programs
State and local governments also offer down payment assistance programs. While many are tailored to first-time buyers, others are available to repeat buyers who meet specific income or location requirements.
You can use the Chase Homebuyer Assistance Finder to review available home assistance programs where you’re searching.,
“The Chase Homebuyer Grant is a substantial advantage for clients who find a qualifying property … Buyers can also receive seller credits for closing costs and prepaid items, while still utilizing a $2,500 or $5,000 homebuyer grant to reduce their interest rate or lower their cash-to-close by applying it to their down payment. To further support our clients, I provide a link to our affordable lending search website, enabling them to explore approved third-party down payment assistance and grant opportunities. This tool helps clients research options, begin the application process with local assistance providers, and combine these resources with our loan programs and homebuyer grants for maximum affordability.”
- Shawn Leverette, Columbus, OH
Government loans
It is possible to qualify for some government loans with no money down. Specifically, these include the U.S. Department of Veterans Affairs (VA) loans and U.S. Department of Agriculture (USDA) loans.
Keep in mind that VA loans are only available for qualifying service members and their families. Similarly, USDA loans have location and income-limit restrictions. Chase does not offer USDA loans at this time.
Tap into retirement accounts
If you have an employer-sponsored 401(k) account, you have the option to withdraw or borrow against it. If you take an early withdrawal, you’ll owe income taxes on what you take out, and you’ll also be hit with an additional 10% tax on the withdrawal if you take it out before you reach the official retirement age of 59½.
You can also take out a loan against your 401(k). This avoids the 10% early withdrawal fee, but you’ll be responsible for paying the loan back. You may still owe interest on the loan even though you’ve technically borrowed it from yourself. If you leave the company, your plan sponsor may require you to repay the full outstanding loan balance.
If you have an individual retirement account, you may be able to take a distribution, but you cannot borrow from an IRA. A distribution used for a qualified first-time home purchase may qualify for an exception to the 10% additional tax, up to the applicable IRS limit. Ordinary income tax and other rules may still apply, so consider consulting a qualified tax professional.
A word of caution
Tapping into your retirement savings comes with significant risks. In addition to repaying the loan and owing taxes, you’re also depleting your future savings and reducing the compound interest you’ll earn over time.
Gift funds
If you’re fortunate enough to have loved ones who can help you with your down payment, gift funds are another way to come up with the cash up front. With the Chase standard agency mortgage, an entire down payment can be covered by gift funds.
Alternative purchase arrangements
If traditional financing or eligibility requirements are standing in your way, several alternative ownership agreements can help you move forward. These options can make homeownership more achievable by allowing you to share financial responsibility, structure payments differently, or build equity over time.
Each approach comes with its own considerations, so it’s important to understand how they work and which approach best aligns with your goals.
Co-signer
Co-signers agree to take on financial responsibility for the loan if the borrower defaults on payments. However, they don’t have any ownership stake and are not entitled to any of the home’s equity. It’s a common way to qualify for better terms, but it’s important that both parties fully understand the financial commitment involved.
Co-borrower
Co-borrowers are different from co-signers because, in addition to sharing financial responsibility, they are also entitled to ownership and equity stakes. This option can make homeownership more accessible for couples, family members, or friends who want to combine income and credit score strength to qualify for a larger loan or better terms.
When buying together, co-borrowers typically choose between two distinct ownership structures:
- Joint tenancy: Both parties hold equal shares of the property as well as the right of survivorship, so if one owner passes away, their share automatically transfers to the other.
- Tenancy in common (TIC): Co-owners hold unequal shares and pass their ownership interest to heirs instead of the surviving owner.
Rent-to-own
A rent-to-own agreement allows you to lease a home with the option, or sometimes the obligation, to buy it later. Depending on the contract, a portion of your monthly payment may be credited toward a future purchase price. A rent credit is not necessarily the same as owning equity in the home, and you may lose the credit if you do not complete the purchase.
This arrangement can be a smart steppingstone toward ownership, especially in competitive markets. However, it’s crucial to review the contract terms closely and understand the financial implications before signing.
Assumable mortgages
An assumable mortgage allows a homebuyer to take over the seller’s existing loan, including the remaining balance and interest rate. This can be a valuable opportunity when current mortgage rates are higher than the rate locked in by the seller, since the buyer effectively inherits that lower rate.
Assumable mortgages can be challenging to find because conventional loans are structured to be non-assumable. However, certain government-backed loans may qualify. Even when a loan is assumable, buyers are typically required to pay the seller for any equity they have built in the home. That payment can represent a substantial upfront cost and may reduce the overall financial advantage of purchasing the home.
Expand your housing search
Another unconventional method for prospective homebuyers to consider is to expand the types of properties they’re considering. Thinking beyond traditional single-family homes can uncover opportunities that align with your budget and long-term goals.
- Multi-unit properties: Opting for a multi-family home gives you the chance to live in one unit while renting out the others. This rental income can help offset your mortgage payments and other housing expenses, making ownership more affordable month to month. Over time, that income can even become a source of passive revenue once the loan is paid down, helping you build equity faster.
- Fixer-uppers: Homes in need of repairs or renovations often come at a lower purchase price, which can reduce your upfront costs for the down payment and closing fees. For buyers willing to put in the time and effort, a fixer-upper can be an affordable way to enter the market and personalize a home to your taste.
- Foreclosures: Foreclosed properties are homes that have been repossessed by a lender after the previous owner defaulted on their mortgage. These properties are often priced below market value, creating potential opportunities for buyers with flexibility and vision. However, they’re typically sold as is and may require significant repairs, inspections, or additional due diligence to ensure the investment is sound.
“Chase’s seasoned advisors have a long history within the mortgage industry which helps support the experience and knowledge needed to understand the prospective benefits of considering non-traditional property types. We have the wherewithal to provide a thorough breakdown of the benefits and potential hurdles associated with these types of opportunities and will explain at length what differentiates these considerations as compared to a more traditional property. It is important to have an understanding of the nuanced variations in underwriting policy and product options, of which we do.”
Non-fixed mortgages
Fixed-rate loans aren’t the only option when it comes to purchasing a new home. Talk to your lender about some of these less common loan structures.
Adjustable-rate mortgage
Adjustable-rate mortgages (ARMs) feature interest rates that can change over time. They usually begin with a lower fixed rate for an initial period, such as five, seven, or 10 years, before adjusting at set intervals based on market conditions. The lower starting rate can make monthly payments more affordable early in the loan term and may increase your purchasing power.
However, once the initial period ends, your rate and monthly payment could rise depending on the market. Buyers might choose to refinance into a fixed-rate mortgage before that adjustment period begins to secure a more predictable payment.
Balloon mortgage
A balloon mortgage offers smaller or interest-only payments for an initial period, followed by one large payment known as a balloon payment at the end of the loan. This structure can make early payments more affordable and may appeal to buyers who plan to sell or refinance before the final balance comes due.
However, balloon mortgages carry significant risk if your financial situation changes or you are unable to make the lump sum payment, which could put your home at risk.
Chase does not currently offer balloon mortgages.
In summary
It is taking first-time buyers longer than ever to save enough for a home, but that doesn’t mean ownership is out of reach. By staying flexible and exploring creative approaches such as down payment assistance, shared ownership, or different property types, you can uncover opportunities that bring your goals within reach sooner than expected. As you repay the principal on an amortizing mortgage, you generally build ownership equity. However, home values can rise or fall and not every part of a housing payment reduces the loan balance.
If one of these strategies sounds right for you, a Chase Home Lending Advisor can help you understand your options and create a plan that fits your budget and timeline.
“Take time to learn about the home buying process, financing options, and local market trends. Knowledge empowers you to make informed decisions. Don’t hesitate to seek guidance from professionals, such as real estate agents, mortgage advisors, or financial planners. Their expertise can help you navigate complexities and identify opportunities. A starter home does not need to be perfect. Focus on location, equity-building, and long-term value over aesthetics. Explore co-buying with family or friends to split costs, or look into shared equity platforms to reduce your upfront burden.”
- Mutazz Mohammad, Columbus, OH
