Putting Together Your Down Payment

Many folks who would like to buy a new house can qualify for several different kinds of mortgages, but they don't have much to pay a down payment. Start here

Tighten your belt and save. Scrutinize your budget to find extra money to go toward your down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a specific portion of your paycheck deposited into savings. You might look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your family vacation.

Sell items you do not really need and find a second job. Try to find a second job. This can be exhausting, but the temporary trial can help you get your down payment. In addition, you can put together a comprehensive inventory of things you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. A closetful of small things may add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you own.

Tap into retirement funds. Explore the specifics for your particular plan. Some homebuyers get down payment money by withdrawing funds from their Individual Retirement Accounts or getting funds out of 401(k) plans. You will want to make sure you know about any penalties, the way this could affect on taxes, and repayment obligation.

Ask for help from generous members of your family. First-time buyers somtimes get down payment assistance from thoughtful family members who are anxious to help them get into their own home. Your family members may be eager to help you reach the goal of having your own home.

Learn about housing finance agencies. These agencies provide special mortgage loans to moderate and low income homebuyers, buyers interested in remodeling a home within a specific area, and additional groups as defined by each finance agency. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment help and other benefits. Housing finance agencies may help you with a reduced interest rate, get you your down payment, and offer other benefits. The main goal of non-profit housing finance agencies is to boost home ownership in particular areas.

Learn about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low to moderate-income families get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting home financing. FHA assists first-time homebuyers and others who would not be eligible for a typical mortgage on their own, by providing mortgage insurance to private lenders. Interest rates for an FHA mortgage are typically the going interest rate, but the down payment amounts with an FHA mortgage are less than those of conventional loans. The required down payment can go as low as 3 percent while the closing costs may be covered by the mortgage.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has mimimal closing costs, and provides a competitive rate of interest. While the VA does not actually provide the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You may fund your down payment using a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than needing to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you a piece of his own equity to help you with your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Typically you'll pay a slightly higher rate with the loan from the seller.

No matter your strategy of putting together down payment funds, the thrill of reaching the goal of living in your own home will be just as sweet!

Need to talk about down payments? Call us at (800) 299-0270.

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