Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have much to pay the standard down payment. Do you want to buy a new house, but don't know how to put together your down payment?

Reduce expenses and save. Look for ways to reduce your expenses to save toward a down payment. You also could enroll in an automatic savings plan at your bank to automatically have a set amount from your paycheck transferred into savings. You might look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a family vacation.

Sell things you don't need and find a part-time job. Perhaps you can find an additional job to get your down payment money. In addition, you can put together a comprehensive inventory of things you may be able to sell. Broken gold jewelry can be sold at local jewelers. You may have desirable items you can put up for sale on an online auction, or quality household goods for a garage or tag sale. You might also research what any investments you hold will sell for.

Borrow funds from your retirement plan. Investigate the provisions of your particular plan. Many homebuyers get down payment money by withdrawing from Individual Retirement Accounts or borrowing from 401(k) plans. Make sure you know about any penalties, the way this may affect on your taxes, and repayment obligation.

Ask for a generous gift from family. First-time buyers are often fortunate enough to receive down payment assistance from caring family members who may be eager to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Provisional mortgage loans are provided to homebuyers in specific situations, like low income homebuyers or homebuyers planning to improve homes in a certain part of town, among others. Financing through this type of agency, you can receive a below market interest rate, down payment assistance and other perks. Housing finance agencies may assist eligible homebuyers with a reduced interest rate, help with your down payment, and offer other advantages. The primary mission of non-profit housing finance agencies is boosting the purchase of homes in certain parts of the city.

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

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income buyers qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who might not be able to qualify for a traditional mortgage on their own, by offering mortgage insurance to lenders. Interest rates with an FHA mortgage are generally the current interest rate, while the down payment requirements for an FHA loan will be below those of conventional loans. Closing costs may be covered by the mortgage, while the down payment may be as low as 3% of the total amount.

• VA loans

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

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In the option of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. You would borrow the largest portion of the purchase price from a traditional lender and borrow the remainder from the seller. Usually this kind of second mortgage will have higher interest.

The feeling of accomplishment will be the same, no matter which method you use to come up with your down payment. Your new home will be your reward!

Want to discuss down payment options? Give us a call: (707) 252-2700.