Getting Help With that Down Payment

While most people want to own a home, young singles and couples often find it difficult to find that tough-to-pull-together down payment. Lots of more established people find that getting into that dream house is a tough nut to crack.

But it doesn't have to be. Simple financial strategies exist that allow disadvantaged buyers to split the cost of a house by sharing the wealth.

Using a form of co-ownership called equity sharing, at least two people or entities can own one piece of real estate and the second party - often mom and dad or a friend - doesn't have to be a resident. Nor does the second party have to wait for the property to be sold in order to benefit from the investment. Co-owners who itemize can use the arrangement to claim deductions of their income taxes.

For instance, Mom and Dad might agree to bankroll the down payment in return for a proportional share of the home's appreciation. In some cases, the sellers may be willing to take on the investor role if they haven't been able to recoup the full value of their home.

Whoever the investor is, he or she will want to be named on the title along with the occupant, but may not want to be named on the loan, since it could hamper future investments with high debt-to-income ratio.

Another option is known as a co-occupier arangment, in which at least two parties fund a down payment, pay subsequent homeownership costs, occupy the property together and then split the gains or losses from the sale of the home.

These arrangements, while the only option for many buyers,a re not for everybody.

Some questions the buyers should ask themselves first:

Am I willing to stay in one home for five years? Are my business and personal circumstances stable? Would I feel comfortable discussing future financial problems with my investor? And can I share control of my home?

For investors:

Can I afford to tie up my money for the next five years? Would I feel comfortable delegating control? Am I willing to consider investment decisions from a homeowner's standpoint?

And last but not least, always consult a CPA about all tax angles, and avoid personal loans, which are both difficult to recoup, and non-tax exempt if it's over $12,000 as a gift to a child.