Can’t afford a down payment? Don’t worry, banks and startups have a plan

Economists warn this could cause further supply strain

New York /
Jul.July 03, 2018 10:17 AM

Bankers and family members lending money to a home for sale (Credit: Pixabay and iStock)

As renters struggle to set aside money each month, companies are coming up with others ways for them secure down payments on homes.

Nearly 40 percent of renters ages 25 to 34 don’t set aside any money each month for a down payment on a home, according to a survey last year by Apartment List. To help address this, startups and established lenders have found ways to provide these young prospective buyers with the funds necessary to secure a mortgage. For example, HomeFundMe, run by lender CMG Financial, allows prospective homebuyers to crowdfund down payments from family members and friends. Startup Loftium supplies up to $50,000 for a down payment if a buyer agrees to rent out one of the rooms in their new home through Airbnb and share the profits.

Other companies, including Unison Agreement Corp. and Landed Inc., offer “shared equity” contracts, which provide funds for down payments if the buyer promises part of the home’s future value to investors like pension funds or foundations, the Wall Street Journal reported. Even banks like Morgan Stanley and Bank of America provide programs that allow young buyers to get a mortgage with nothing down if their parents are willing to put up investment assets as collateral.

Some economists warn, however, that making it easier for buyers to rustle up a down payment compounds the problem of limited housing supply in an already fiercely competitive market. [WSJ] — Kathryn Brenzel


Related Articles

arrow_forward_ios
Michael Stern and Walker Tower unit 15B (JDS, Google Maps)
Michael Stern’s Walker Tower pad sells for 24% under ask
Michael Stern’s Walker Tower pad sells for 24% under ask
Homebuilding is largely responsible for the increase in construction spending. (Getty / Photo Illustration for The Real Deal)
Construction spending hits new record in January
Construction spending hits new record in January
A Columbus Circle apartment once owned by Tom Brady and Gisele Bundchen  went into contract last week, helping the Manhattan luxury home market finish February on a high note. 551 West 21st Street on the right. (Photos via Compass, Getty, Foster and Partners)
Manhattan luxury market has best month in six years
Manhattan luxury market has best month in six years
(iStock/Illustration by Kevin Rebong for The Real Deal)
These are real estate executives’ worst worries for 2021
These are real estate executives’ worst worries for 2021
Richard Lampen and Howard Lorber (Vector Group)
Calling all founders: Howard Lorber’s Vector Group launches VC arm
Calling all founders: Howard Lorber’s Vector Group launches VC arm
Bryan Cranston and his California beach house (Getty, Realtor)
“Breaking” news: Bryan Cranston lists eco-friendly SoCal beach pad
“Breaking” news: Bryan Cranston lists eco-friendly SoCal beach pad
RE/MAX CEO Adam Contos (Facebook)
RE/MAX revenue ticks up in Q4 but profit sinks
RE/MAX revenue ticks up in Q4 but profit sinks
(iStock/Illustration by Kevin Rebong for The Real Deal)
State will use undercover testers to combat housing discrimination
State will use undercover testers to combat housing discrimination
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...