Your Down Payment

Lots of buyers can qualify for various loan programs, but they don't have much to pay the standard down payment. Here's where you start

Slash the budget and build up savings. Turn your budget inside out to find extra money to save for your down payment. There are bank programs in which some of your take-home pay is automatically deposited into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or skip a family vacation.

Sell items you do not need and get a second job. Perhaps you can find an additional job and build up your earnings. You can also get serious about the possessions you really need and the items you may be able to sell. Maybe you own desirable items you can put up for sale on an auction website, or household goods for a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow funds from your retirement plan. Explore the specifics of your individual plan. It is possible to take out money from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Make sure you comprehend the tax consequences, your obligation for repaying funds, and possible penalties for withdrawing early.

Ask for help from members of your family. Many buyers somtimes receive help with their down payment assistance from gracious parents and other family members who are prepared to help them get into their first home. Your family members may be eager to help you reach the milestone of owning your first home.

Contact housing finance agencies. Provisional mortgage loans are offered to buyers in specific situations, such as low income homebuyers or future homeowners looking to remodel homes in a particular part of town, among others. With the help of this type of agency, you may receive an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies can assist eligible buyers with a lower rate of interest, get you your down payment, and offer other benefits. The primary mission of not-for-profit housing finance agencies is boosting the purchase of homes in specific areas.

Explore no-down and low-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in helping low to moderate-income individuals qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling homebuyers who will not qualify for a typical loan, to obtain financing. Interest rates for an FHA loan generally feature the going interest rate, but the down payment for an FHA loan are smaller than those of conventional loans. The required down payment may go as low as three percent while the closing costs can be covered by the mortgage loan.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan does not require a down payment, has mimimal closing costs, and provides the benefit of a competitive interest rate. Although the loans don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to loan you a portion of his own equity to assist you with your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remainder with the seller. Typically you will pay a somewhat higher interest rate on the loan financed by the seller.

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

Want to discuss down payments? Give us a call at (707) 252-2700.