Down Payment Savings Solution for Home Buyers

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Let’s face it: Buying a home in Portland in the current housing market is an investment hurdle that can be discouraging. Even though the rent vs. buy debate increasingly swings to “buy”, how’s a young couple – or anyone, for that matter – to save up for a down payment?

Enter the IDA, or Individual Development Account. It’s a savings account that’s unique in one key way: Once you’ve met your savings goal, it gets matched, three-to-one.

Where does this free money come from? In 1999, Oregon set up an IDA tax credit program that allows donors to give money and save a bundle on their taxes. The money goes into a special account to be administered to qualifying applicants by Oregon’s Housing and Community Services department and participating non-profits.

Like a microloan, IDAs allow participants to put the funds toward whatever is going to get them ahead in life — starting a business, education, repairing their current home, or home ownership. Unlike a microloan, the funds are yours to keep.
To qualify, individual applicants must have an income well below the poverty line, and a net worth of less than $20,000. Once the application is accepted, you start saving — whether it’s just a few hundred dollars or up to $3,000 over a 12-month period. You must agree to save the same amount every month, and to reach your savings goal in the allotted time. After the money you committed to save is in the IDA account, the non-profit you work with puts in the matching funds.

For example, if you save the maximum, $3,000, you’ll get $9,000 matched and have a total of $12,000 in the account, tax-free! That might not be enough for a full 20% down payment, but with some of the new FHA 3% down loans, it definitely makes the dream of home ownership more attainable for those who would otherwise have not thought it possible.

What to do while you’re stashing away that cash in your IDA? Get in touch with your Portland real estate agent, of course! I can help you figure out what homes are in your price range, what neighborhoods are a good fit for you, and where to go for your home loan. Keep tabs on the Portland housing market through my monthly RMLS reports and through my real estate blog so that when the time comes to buy, you’re as informed as possible.

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