When you can't make it rain

You want to buy a home? That's great. You think you can't afford to buy a home? That's a bit of a problem. But it's not one unique to you.

Home prices are rising, reaching an average $240,000 last summer and triggering "yellow lights on affordability," according to Lawrence Yun, chief economist for the National Association of Realtors. At the same time, the number of available homes for sale has dwindled by nearly 6 percent within the last year.

The result: A market souped in demand, a limited number of sellers and buyers willing to make supersized offers to outshine the competition.

So yeah, affordability is a bit of an issue for some of us these days. That doesn't mean your dream of owning a home should vanish in the ether. There are ways you can still buy without completely breaking your bank.

Here's the part where we tell you how:

1) Go low on the first down

It's like the age-old adage of home buying: Put down 20 percent on your home so you can avoid paying private mortgage insurance, start building equity and get a better deal on your loan.

If that sounds easier said than done, that's because for a lot of people it is — 54 percent of renters last year told Trulia that saving for a down payment was their biggest hurdle to buying a home.

Keep hope alive. There's a variety of loan products and programs that make affording the down payment less of a hassle.

FHA loans: Supported by the Federal Housing Administration, these loans allow qualified borrowers to put as little as 3.5 percent down on their home. The caveat: You have to pay upfront and annual mortgage insurance premiums, which protect the investor should you default on your loan.

USDA loans: With these loans, backed by the U.S. Department of Agriculture and designed for low- and moderate-income families living in rural areas, borrowers don't foot the cost of a down payment at all. Instead, the government insures 100 percent of the mortgage. The hitch: You have to pay a small insurance premium at closing and as part of monthly mortgage payments.

Fannie & Freddie: In 2014, housing finance giants Fannie Mae and Freddie Mac jumped on the bandwagon and started offering borrowers conventional loans requiring 3-percent down. Each program carries distinct eligibility requirements and will only cover certain types of properties, such as single-family homes or houses in low-income areas. Ask your mortgage professional for information on Fannie's HomeReady loan and Freddie's HomePossible mortgage.

2) Fix 'er up

So maybe your budget isn't ready to handle that beachside bungalow you've been ogling for the last five years. Lower your expectations a bit and start small, maybe with a fixer-upper?

We know what you're thinking: It will cost just as much to rehab a home on the brink of disrepair as buying a brand spanking new one.  

Not so fast.

Renovation loans (which we wrote about, by the way) are made to help borrowers pay for their home and spruce it up at the same time in one lump sum. Some loans give you up to $35,000 for value-added improvements to your home. Others let you make renovations and repairs totaling 50 percent of your property value with your existing mortgage.

3) Minimize your debt

A mountain of debt attached to your name is a pretty big impediment to buying a home, and one of the factors that could make your monthly payments unaffordable.

To better your chances, consider consolidating your student loans or refinancing your car loan so your monthly outlay of cash is lower, says Movement loan officer Chris Reshetar. Pay down those credit card balances and start cutting unnecessary sources of debt out of your life (i.e. that department store credit card you know you shouldn't have).

4) 'Tis better to accept gifts than to go broke

They gave you food, shelter, clothing and the tools necessary to become a successful human being. Maybe now your parents will give you that troublesome 20 percent down payment, too.

It's called gift money, and most lenders will accept it so long as you detail your relationship with the giver, usually in a letter; verify that the money is indeed a gift (not a loan); and provide bank statements showing a transfer of funds.

Gifts don't just have to come from Mom and Dad. Donors usually can include any family member, spouse and, in some cases, your husband or wife-to-be, Reshetar says.

"What becomes really important is that the consumer understands that it has to be documented very carefully," he says. "They won't get the house without the proper paper trail for the gift."

5) Find a seller willing to pay the closing costs

Yes, this is a thing.

When sellers put a house on the market, they want it off their hands for the best price possible. To make their properties more appealing and attract a wider pool of buyers, some sellers offer to pay the closing costs with the sale of their home.

Really.

While this doesn't give you much of a cushion at the beginning of your home buying process, it does give you peace of mind near the end when closing costs can easily put a homeowner on the hook for thousands of dollars.

6) Go to school or seek charity

Education and resources for first-time homebuyers are aplenty.

Groups such as Fannie Mae, the federal Housing Urban Development agency and the Mortgage Guaranty Insurance Corporation offer free or low-cost homebuyer classes and tutorials that help with budgeting and financing.

Nonprofits, such as Habitat for Humanity, the Nehemiah Foundation and NeighborWorks America, provide grants and assistance for hopeful homeowners otherwise unable to afford it.

There are lots more. Here are lists from the National Tax-Lien Association: http://bit.ly/2b7Q3jq & Housing Assistance Council: http://bit.ly/2aUuH6f

7) Take the credit

Maybe you're willing to buy but still worry about those monthly payments. Check out the mortgage credit certificate (MCC), a program that enables homeowners to save up to $2,000 by claiming a federal tax credit for 30 percent of the interest they've paid on a home, Reshetar says.

Head spinning? We'll try to make this simple:

Hypothetically speaking, let's say you pay $6,000 in interest the first year of your mortgage. If you take advantage of the MCC, 30 percent of that interest translates into $1,800 of savings each year you live in your home (mathematically speaking, that's "6,000 x .30").

That's extra money on your tax return that you can use toward paying down your mortgage.

But if you'd rather not wait for the lump sum once a year, tell your employer to change your withholdings to reduce the amount of federal taxes deducted from your paycheck. Take your $1,800 savings, divide that by 12 (for 12 months) and enjoy the extra $150 in your paycheck each month.

Here's the rub: The credit's not available in all 50 states so check with your state's housing finance agency or commission to see if this is even an option for you.