Buying a Home with Little Cash Here’s How to Make It Happen

Hello, I’m Keith Gordon, a 40-year veteran of the real estate market and a loan officer with American Financial Network. My firm, Altru® Realty, allows me to help you with both mortgages and real estate. However, due to legal and ethical guidelines, I can’t handle both sides of the transaction for you. If you’re buying a home and need representation, I will represent you on the real estate side and I’ll let one of my trusted partners handle the mortgage side to avoid any conflicts of interest.

Today, I want to talk about how to buy a home when you don’t have a lot of cash. Whether you’re a first-time homebuyer or simply short on savings, there are ways to make homeownership a reality. Let’s dive into your options!

Option 1: Ask a Relative for a Gift

If you’re lucky enough to have a generous relative, they can help you with your down payment (not your closing costs) through a gift letter. Here’s how it works:

• The gift must come from relative friends or coworkers allowed.
• The money must be documented properly and show up in your account in a specific way.
• Your loan officer will guide you through the process to ensure everything is done correctly.

This is a great option if you have a “rich uncle” or family member willing to help. But what if you don’t?

Option 2: Ask the Seller for Help (Seller Concessions)

If you don’t have a relative to help, you can ask the seller to chip in. This is called “seller concessions”, and it’s a common strategy in real estate. Here’s how it works:

What Are Seller Concessions?

Seller concessions are when the seller agrees to cover all or a portion of your closing costs. In Florida, the most popular contract is the FAR/BAR “As-Is” Residential Purchase and Sale Agreement. On page 12, lines 590–620, you can add language or terms that supersede other parts of the contract. The specific name of this is called “additional terms.”

How to Ask for Seller Concessions:

Add language in this section of the contract:

• “Seller agrees to provide Buyer with 3% of the sales price at close towards Buyer’s closing costs.”
• You can ask for up to 6% in seller concessions, but 3% is a common and reasonable request.
• Will the Seller Agree?
• In today’s market (February 2025), we’re in a buyer’s market, which means sellers are more likely to agree to concessions.
• Many Realtors who work with first-time homebuyers (typically in the $300,000-and-under market) are used to buyers asking for concessions and often advise their sellers to agree.

Why Seller Concessions Matter

Let’s break it down with an example:

• If you’re buying $300,000 home, your closing costs will likely be around 3% of the mortgage amount or about $9,000.
• If you’re using an FHA loan, you’ll also need a minimum of 3% down payment or $9,000. That’s a total of $18,000 of upfront costs—a significant amount for many buyers.
• By asking for 3% in seller concessions, you can reduce your upfront costs to just the down payment, making homeownership more achievable.

When to Use Seller Concessions

• Buyer’s Market: In a buyer’s market (like the one we’re in now), sellers are more willing to negotiate and offer concessions.
• Seller’s Market: In a seller’s market, concessions may be harder to come by, but it’s still worth asking.

What are the Risks?

• At times, when a seller agrees to pay concessions to a buyer, the offer they negotiate may end up being above what an appraiser will assign value causing an appraisal shortfall. This of course is a way to get the seller more at the same time accommodate the buyer’s request for concessions. This could tank the deal.
• If this happens, the seller could agree to adjust the sales price to meet the appraisal and close. Buyer and seller simply create a price addendum and send it to the mortgage broker.
• If the seller doesn’t agree, the buyer could lose the inspection and appraisal costs which in total are nearly $900.
• Buyer’s Market: In a buyer’s market (like the one we’re in now), sellers are more willing to negotiate and offer concessions.
• Seller’s Market: In a seller’s market, concessions may be harder to come by, but it’s still worth asking.

Final Thoughts

Buying a home with limited cash is possible if you know your options. Whether it’s through a gift from a relative or seller concessions, there are ways to reduce your upfront costs and make your dream of homeownership a reality.

If you have questions about getting a pre-approval letter or need help navigating the homebuying process, feel free to reach out to me and my team. I’m Keith Gordon, a mortgage broker with American Financial Network and a licensed real estate professional with 40 years of experience in Florida.

Thanks for reading, and I hope this video has been helpful!

Ready to take the next step? Contact me today at 888-392-4806 or info@altrurealty.com  to discuss your homebuying goals and explore your financing options. Let’s make your dream home a reality!

Mortgage NMLS: 2137080

Real Estate License: BK3320923