Your Down Payment

Many borrowers can qualify for a loan, but they can't afford a large down payment. Here's where to get started

Slash the budget and build up savings. Scrutinize the budget to uncover extra money to go toward your down payment. You could also try enrolling in an automatic savings plan to have a percentage of your payroll automatically moved into savings. Some practical approaches to build up funds include moving into housing that is less expensive, and skipping a year's vacation.

Sell things you don't really need and get a part-time job. Perhaps you can find a second job and save your earnings. You can also get serious about the possessions you actually need and the items you can put up for sale. Maybe you own collectibles you can put up for sale on an online auction, or quality household goods for a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow money from a retirement plan. Investigate the provisions of your specific plan. Some homebuyers get down payment money by withdrawing funds from their Individual Retirement Accounts or borrowing from their 401(k) plans. You will need to ensure you understand about any penalties, the way this could affect on your taxes, and repayment obligation.

Ask for help from family members. First-time homebuyers somtimes receive down payment help from thoughtful parents and other family members who may be eager to help them get into their own home. Your family members may be happy at the chance to help you reach the milestone of having your first home.

Contact housing finance agencies. These agencies offer provisional mortgage programs for moderate and low income homebuyers, buyers interested in rehabilitating a home in a particular area, and other specific types of buyers as specified by each finance agency. Financing through this type of agency, you can get an interest rate that is below market, down payment assistance and other perks. These kinds of agencies can help eligible homebuyers with a lower interest rate, help with your down payment, and provide other assistance. These non-profit programs exist to build up home ownership in specific areas.

Explore no-down and low-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 part in aiding low to moderate-income families get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, helping the buyers to become eligible for a home loan. Interest rates for an FHA loan are generally the market interest rate, while the down payment with an FHA mortgage are below those of conventional loans. The required down payment can be as low as three percent while the closing costs might be covered by the mortgage.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. While the loans are not actually financed by the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment through a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually this form of second mortgage will have a higher rate of interest.

No matter your strategy of pulling together your down payment, the satisfaction of reaching the goal of owning your own home will be just as great!

Need to talk about down payments? Call us at (888) 299-4585.

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