Crowdfunding comes to home buying
No money? No problem. Thanks to one lender, you may still be able to crowdfund your down payment.
Longtime mortgage firm CMG Financial has just announced the launch of its HomeFundMe platform—a tool that lets buyers crowdfund their down payment, a la Kickstarter and GoFundMe.
Crowdfund your down payment
Potential buyers can use HomeFundMe to accept donations toward their down payment, and donors can give up to $7,500 max each.
If the buyer earns less than the local median income, HomeFundMe will even match those donations—to the tune of $2 for every dollar donated.
But like anything, there are, of course, strings attached. Buyers using HomeFundMe will need to use CMG for their Fannie Mae- or Freddie Mac-backed mortgage loan, and they’ll need to go through housing counseling first—though CMG will cover the costs of those services.
There’s also a limit of $2,500 or 1 percent of the home price on HomeFundMe’s matching donations.
Though the platform was only just launched, according to CMG, about 100 buyers have used HomeFundMe so far—all as part of its initial beta testing.
The future of financing?
CMG launched HomeFundMe with the approval of both Fannie Mae and Freddie Mac. The government-sponsored enterprises will review the results of the platform once beta testing concludes in June.
At that point, according to Jonathan Lawless, Fannie Mae’s VP of Product Development and Affordable Housing, other lenders could offer similar crowdfunding options for their borrowers.
Already, some companies have dabbled in the space. Feather the Nest, for example, lets buyers set up a real estate gift registry. Buyer can also use staples like GoFundMe and HoneyFund to accept gift funds from friends and family. Those tools do, however, take a cut of earnings, and they also charge fees for payment processing. HomeFundMe does neither.
What are today’s mortgage rates?
Since HomeFundMe requires buyers use CMG as their lender, the product doesn’t allow shopping. Before jumping on board, get today’s mortgage rates from a variety of lenders, and make sure you’re getting the best possible deal.