Building Your Down Payment

Lots of folks who would like to purchase a new home can qualify for a loan, but they can't afford a large down payment. Here are a few ways to get together your down payment

Cut expenses and save. Look for ways you can trim your expenses to put away money for a down payment. There are bank programs in which a specific portion of your take-home pay is automatically transferred into savings each pay period. Some practical ways to put together funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work more and sell things you don't need. Try to get an additional job. This can be rough, but the temporary difficulty can help you get your down payment. In addition, you can put together a comprehensive list of items you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. A closetful of small things could add up to a fair amount at a garage or tag sale. You might also look into what your investments will sell for.

Borrow money from your retirement plan. Research the specifics of your individual plan. Some people get down payment money by withdrawing funds from their Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you understand the tax consequences, repayment terms, and possible early withdrawal penalties.

Ask for a gift from your family. Many buyers somtimes get down payment help from caring parents and other family members who are anxious to help get them in their own home. Your family members may be willing to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Provisional loan programs are provided to homebuyers in specific circumstances, like low income buyers or future homeowners planning to remodel homes in a certain place, among others. Working through a housing finance agency, you may get a below market interest rate, down payment assistance and other perks. Housing finance agencies can assist you with a reduced rate of interest, get you your down payment, and provide other benefits. The main mission of non-profit housing finance agencies is to boost the purchase of homes in certain areas.

Learn about low-down and no-down mortgages.

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low and moderate-income Americans qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be eligible for a conventional mortgage by themselves, by providing mortgage insurance to private lenders. Down payment sums for FHA mortgages are lower than those for typical mortgages, although these loans hold average rates of interest. Closing costs might be financed in the mortgage, and your down payment can be as low as 3% of the total.

  • VA mortgage loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a low rate of interest, no down payment, and reduced closing costs. Even though the loans don't originate from the VA, the office verfifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher interest rate with the loan financed by the seller.

No matter how you gather down payment money, the thrill of living in your own home will be just as great!

Want to discuss down payment options? Call us at (888) 299-4585.

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