By Veronica Ocejo Johnson, February 23, 2023
If you’re just starting your home purchase journey, you’re probably asking yourself, how do people even pay for these homes? With the median price in the Portland Metro area hovering at $507,500, it’s understandable where this question comes from. For a buyer in 2023, there are many options available to make your first home purchase not only attainable but affordable.
There are important aspects of financing the purchase of your first home. 1) To purchase a home, you can either buy it with cash or utilize the services of a lender to provide the finances for the purchase through a loan. 2) You as the buyer will bring a downpayment to the table and the lender will bring the remaining amount as a loan. 3) There are additional costs associated with the purchase that you will also need to save money to cover as well.
Here are ways to creatively save for your down payment:
- State programs. Oregon has down payment savings accounts at qualifying banks! As an individual, you may deduct up to $5,000 from your Oregon taxable income for deposits and earnings in a First-Time Home Buyer Savings Account each year, for a maximum of 10 years. For those filing jointly, the deduction can be up to $10,000 per year. Willamette Valley Bank has qualifying savings accounts. Ask your local bank if they have a qualifying bank account. Find out more about the program at the Department of Revenue website.
- Save regularly. If you receive a salary on a regular cadence, have your employer deposit a percentage of your income into a savings account. It could start anywhere from 1-3% of your salary to get things rolling. Every bit counts! The automation will make sure that it actually happens instead of waiting on you to make the transfer.
- Find a grant, interest free loans or matching program. While this can take a bit more time, programs like Portland Housing Center have a 5:1 matching program for qualifying participants (for every $1 you put in, they put in $5). Gresham also has income qualifying interest free down payment assistance loans for properties purchased within the city limits.
- Talk to family & friends. While many people suggest getting a 20% down payment, the reality is that most people are using 5-7% down payments to get them into their first home. Ask friends who have recently purchased a home about how they did it. You’d probably be surprised by how many had financial assistance from family members or close friends.
It’s important to remember that your down payment won’t cover the additional costs of purchasing a home. Be sure to ask all lenders about the costs of the loan and processing fees such as escrow and transfer taxes.
Overall, when it comes to your finances it’s always best to seek counsel from experts in the industry. A lender will help clarify the benefits and potential obstacles of lower down payments. A financial planner can help you set up a high-interest savings account to make sure you are capitalizing on the money you are saving. An expert local realtor can help connect you with lenders and give you insight into the market.
Whether you’re six months or six years away from purchasing your first home, now is the time to consult your team of experts and come up with a plan to secure your future first home. Reach out with a call or email to start your home-buying journey today!
Veronica Ocejo Johnson
Broker | OR
She/Her
I create a sense of home before you even get there. Whether selling a home for top dollar or finding a dream home, I am invested in understanding my clients at an individual level to make sure all their needs are met...
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- T: 503-453-7806
- veronica@vidapdx.com
