Your Down Payment
Lots of people who are looking to purchase a new home qualify for a mortgage loan, but they can't afford a large down payment. Here's where you start
Slash your budget and build up savings. Scrutinize the budget to find ways you can cut expenses to go toward your down payment. You could also try enrolling in an automatic savings plan to have a portion of your pay automatically transferred into your savings account. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.
Work a second job and sell things you don't need. Maybe you can get an additional job to get your down payment money. You can also seriously consider the possessions you actually need and the things you may be able to sell. You might have collectibles you can put up for sale on an auction website, or quality household goods for a tag or garage sale. You could also research what your investments may sell for.
Borrow money from a retirement plan. Explore the details for your individual plan. You can take out funds from a 401(k) plan for you down payment or get a withdrawal from an Individual Retirement Account. Make sure you are knowledgable about any penalties, the way this could affect on your income taxes, and repayment obligation.
Ask for help from generous family members. First-time buyers are often lucky enough to receive help with their down payment assistance from thoughtful parents and other family members who are eager to help them get into their own home. Your family members may be inclined to help you reach the goal of owning your first home.
Contact housing finance agencies. Special mortgate loan programs are offered to buyers in certain situations, such as low income purchasers or buyers looking to remodel homes in a targeted neighborhood, among others. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may assist you with a lower interest rate, get you your down payment, and offer other advantages. The central purpose of not-for-profit housing finance agencies is boosting home ownership in specific areas.
Find out about low-down and no-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low to moderate-income families qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans.
FHA aids first-time homebuyers and others who would not be able to qualify for a conventional loan on their own, by providing mortgage insurance to the lenders.
Down payment totals for FHA mortgages are lower than those of traditional mortgage loans, even though these loans have current rates of interest. The down payment can be as low as three percent and the closing costs can be covered by the mortgage.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan requires no down payment, has reduced closing costs, and offers a competitive rate of interest. While the loans are not actually provided by the VA, the department certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
You may fund your down payment through a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer just has to pull together the remaining 10 percent.
- Carry-Back loans
We a seller carries back a second mortgage, the seller loans you part of his or her equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and finance the remaining amount with the seller. Often, this type of second mortgage will have a higher rate of interest.
No matter how you gather your down payment, the thrill of reaching the goal of owning your own home will be just as sweet!
Want to discuss down payment options? Call us: (800) 299-0270.