If you have been analyzing homes for sale in Baton Rouge and find their price points too harsh to even make a down payment, there are options you may not have considered. This article presents several ideas for affording a home in order to illuminate some points you may have neglected.

Down Payments and Percentages

While many people believe that you must plunk down 20% for a down payment, this myth has proliferated thanks to the private mortgage insurance (PMI) rule that most lenders and mortgage investors interact with. It is perfectly feasible to get a loan with only 3% down, credit score, and income notwithstanding. There are even USDA and VA loans that allow you to buy a home without a down payment. Yes, achieving a 20% down payment is great over the long run but is not required.

Funding Methods

Reshape Your Budget

First, analyze your bank statements and credit card payments. Next, figure out where your money goes, including the cost of rent, utilities, student loans, savings, etc. Then, contrast those figures with your spending on nonessential purchases like fast food, entertainment, etc.

Now that you have an idea of what your expenses amount to, you can better discern what needs to go. Establish a realistic budget for every category and stick to it while also remembering to keep monthly goals toward your down payment.

Downsize

Downsizing is when you shrink your expenses and cost of living below your means, shifting the difference into savings. You can downsize by moving to a smaller place, selling off an extra vehicle, or moving to a cheaper place to live.

Cut Back or Eliminate a Bad Habit

Restricting or discarding a bad habit can pay off in hundreds of dollars you could be putting toward your house. If you like buying impulsively, unsubscribe from marketing mailers; if you love fast food, purchase basic ingredients for home cooking instead.

Cut Your Debt

While attacking debt when you are pursuing a home purchase may seem crazy, the debt-to-income (DTI) ratio is the first thing lenders assess when dealing with you. The greater your debts, the worse you look, resulting in higher interest payments or a higher down payment threshold.

Ask for Help

Friends, family, and even crowdsourcing are all valid sources of funding. Ask loved ones to gift you money instead of presents for birthdays and holidays. Note that some mortgage loans have stipulations regarding gifted funds so make sure to analyze the terms of yours.

Automate Your Savings

Have your bank automate monthly withdrawals into a dedicated savings account. This may be useful for people who have trouble managing funds, passing the work onto someone else. Remember these automatic withdrawals as you do your finances so that you never face an overdraft fee.

The Bottom Line

Homeownership is more feasible than some may believe. Hopefully, this exhaustive list will have mentioned a few notions you had not considered. Like any other long-sought purchase, the acquisition comes down to bringing in more than you spend.