Privately held mortgage bank CMG Financial in San Ramon, Calif., is testing a home buyer crowdfunding platform it calls HomeFundMe to help borrowers raise money for down payments.
Typically gift funds must be from someone who has a significant relationship to the home buyer and not from the seller. The HomeFundMe platform precludes seller involvement but a Fannie variance provided for "test and learn" purposes allows for funds to come from individuals who have a broader range of relationships with the borrower.
"We think buying a home is a community event," said CMG CEO Chris George.
The HomeFundMe crowdfunding campaigns, which borrowers work with advisors to stage, are usually similar to those hosted by a commercial platform like Kickstarter. But the home buyer is not charged additional fees.
The crowdfunding campaigns tend to be staged online but if this is not possible, the company may provide the borrower with fliers to distribute in the community.
"We don't want to have segments of the population that can't leverage the platform," said CMG Chief Marketing Officer Paul Akinmade.
Under certain circumstances, borrowers can get additional grant and matching funds. This may depend on how their earnings compare to the area median income. Additional funds also may be available if they have received in-person housing counseling or completed online financial literacy training.
The funding can be applied in addition to other down payment resources such as state grants.
Down payment funds can be raised on a conditional basis, in which case the money will be returned if the funding is not used for the home loan down payment. But funding also can be earmarked as unconditional, in which case the borrower could use the funds for another purpose.
The down payment is the most commonly cited obstacle to homeownership among renters, according to a Zillow study earlier this year.