HomeFundMe is a platform that allows potential homebuyers to crowdfund their down payment. More recently, it launched a portal where employers can pitch in their employees’ crowdfunding venture.
Crowdfunding is just one among many modern-day methods to overcome the down payment hurdle. HomeFundMe has combined this with contribution matching so an eligible homebuyer can raise money plus receive grants from the lender.
Funding Your Down Payment in Today’s World
Down payments have always been an issue and if you’ve run into serious issues regarding saving up for one, this platform might work for you.
HomeFundMe aims to address the down payment hurdle and maybe speed up the homebuying process. It relies on crowdfunding where anyone can contribute in small amounts to someone’s down payment.
But that’s not all, the lender (there’s only one in-house and approved lender) matches the contributions made to homebuyers toward their down payment.
How does it work?
HomeFundMe calls it a 2 for 1 arrangement: For every $1 raised, the in-house lender (CMG Financial) will contribute $2. The actual grant will depend on the area median income:
- If a homebuyer’s income falls below AMI, he or she will receive up to $2,500 or 1% of the home’s purchase price, whichever is lower.
- If a homebuyer’s income goes above AMI, he or she will receive up to $1,500 or 1% of the home’s purchase price, whichever is lower.
The platform has recently introduced Affinity portal where employers have access to a customized platform where they can help their employees start their own down payment crowdfunding campaigns, as detailed below.
Enrolled employers have the option to match the contributions or donations.
What’s in it for me?
HomeFundMe provides you or any other potential homebuyer an opportunity to crowdfund down payments from any sources. The funds may be pure gifts or contingent on something.
One major perk is the lender contribution that results in grants + the amount raised. This doubles the down payment and hastens the speed of coming up with one.
The down payment crowdfunding platform takes pride in being approved by Fannie Mae and Freddie Mac. According to HomeFundMe, the two agencies will back the mortgages.
HomeFundMe also provides eligible homebuyers access to a dedicated team of lender, loan officer, fundraising coach, and realtor to help out in the fundraising, homebuying, and mortgage financing processes.
The platform promises to be safe with contributions escrowed until closing. If the transaction does not close, the contingent funds will be returned to their rightful owners.
More importantly, it costs none — no taxes, commissions or fees.
How to Use HomeFundMe?
Based on HomeFundMe’s step-by-step guide:
Step 1: Sign up for HomeFundMe using your Facebook account or email address.
Step 2: Get prequalified by completing the online application. It’s a requirement so you can launch a campaign. Prequalification also gives you an idea of your ability to qualify for a mortgage, the amount you’ll likely get, and the down payment you’ll likely need.
Step 3: Build your campaign for your down payment. In your intro video, showcase your goals and desire to own a home and make it as creative as possible.
Step 4: Share your content so more people can see and potentially donate to your cause. You may want to sign up for HomeFundMe using your Facebook account so it’s easier to share your video. Post it on other social media sites as well.
Step 5: Coordinate with the HomeFundMe team. As noted above, you’ll have access to a fundraising coach for strategies and heads-up on the homebuying process. Your loan officer will help you with the mortgage financing process, including applicable down payment assistance programs.
Step 6: Work in a 12-month timeline to close your loan for your home. The timeline starts when you receive your first gift or donation.
Step 7: Buy your new home: your funds will be ready when you reach your campaigned goal.
So, how are your homeownership preparations coming?Click to See the Latest Mortgage Rates»