Building Your Down Payment

Lots of people who would like to buy a new house qualify for several different kinds of mortgages, but they don't have much to put up a down payment. Want to look into getting a new home, but don't know how to get together your down payment?

Reduce expenses and save. Look for ways to trim your monthly expenses to save toward a down payment. You could also try enrolling in an automatic savings plan to automatically have a specific portion of your take-home pay moved into a savings account. You could look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Work a second job and sell things you don't need. Perhaps you can get a second job and build up your earnings. You can also get serious about the possessions you actually need and the things you can sell. Multiple small items could add up to a nice sum at a garage or tag sale. You might also look into what any investments you hold will sell for.

Borrow from a retirement plan. Check the provisions of your specific plan. It is possible to borrow funds from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Make sure you know about any penalties, the effect this may have on income taxes, and repayment terms.

Ask for assistance from generous members of your family. First-time homebuyers are often fortunate enough to receive help with their down payment help from caring family members who may be anxious to help get them in their first home. Your family members may be willing to help you reach the milestone of having your first home.

Research housing finance agencies. Provisional mortgate loan programs are extended to buyers in certain situations, like low income purchasers or future homeowners looking to renovating homes in a particular neighborhood, among others. With the help of this type of agency, you may be given a below market interest rate, down payment assistance and other benefits. These kinds of agencies may assist you with a lower interest rate, help with your down payment, and provide other advantages. These non-profit programs exist to build up the value of homes in specific areas.

Explore no-down and low-down mortgage loan programs.

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income buyers get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get home financing. FHA assists first-time homebuyers and others who would not be able to qualify for a typical loan on their own, by providing mortgage insurance to private lenders. Down payment amounts for FHA loans are below those of traditional mortgage loans, although these loans hold current interest rates. The down payment may be as low as 3 percent and the closing costs can be covered by the mortgage loan.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a low fixed rate of interest, no down payment, and reduced closing costs. Although the VA does not issue the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You may fund a down payment using a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the home's price, while the first mortgage covers 80 percent. Instead of the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you a piece of his own equity to help you get your down payment funds. You would borrow the majority of the purchase price from a traditional lender and borrow the remainder from the seller. Generally, this type of second mortgage has higher interest.

The feeling of accomplishment will be the same, no matter how you manage to come up with your down payment. Your brand new home will be worth it!

Want to discuss the best options for down payments? Call us: (888) 299-4585.

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