Building Your Down Payment

Lots of folks who are looking to purchase a new house qualify for several different kinds of mortgages, but they don't have a lot of cash to put up the standard down payment. Want to buy a new house, but aren't sure how you should put together your down payment?

Cut expenses and save. Turn your budget inside out to find extra money to save for your down payment. You could also decide to enroll in an automatic savings plan to have a percentage of your pay automatically deposited into savings. You could 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 vacation.

Sell items you do not need and get a second job. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can make an exhaustive list of items you may be able to sell. Broken gold jewelry can be sold at local jewelry stores. You might own desirable items you can sell at an online auction, or quality household items for a garage or tag sale. Also, you can think about selling any investments you own.

Borrow money from a retirement plan. Research the specifics of your particular plan. Many people get down payment money from withdrawing funds from Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure to find out about the tax ramifications, your obligation for repaying the money, and penalties for withdrawing early.

Ask for assistance from generous members of your family. Many buyers somtimes receive help with their down payment help from giving parents and other family members who are willing to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of buying your first home.

Contact housing finance agencies. These types of agencies offer special mortgage loans for low and moderate-income borrowers, buyers interested in remodeling a home within a specific area, and additional groups as defined by the agency. Financing through a housing finance agency, you can be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies can help eligible homebuyers with a lower rate of interest, get you your down payment, and provide other benefits. The principal purpose of non-profit housing finance agencies is boosting residence ownership in targeted areas.

Find out about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping 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) helps individuals get FHA aids first-time buyers and others who may not be eligible for a conventional loan by themselves, by offering mortgage insurance to private lenders. Interest rates with an FHA loan generally feature the current interest rate, while the down payment amounts for an FHA loan are less than those of conventional loans. Closing costs may be covered by the mortgage, and your down payment may be as low as 3% of the total.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan requires no down payment, has mimimal closing costs, and provides a competitive interest rate. Even though the VA does not actually provide the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's price, and the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of putting the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you a portion of his home equity to help you get your down payment funds. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher interest rate with the loan financed by the seller.

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

Want to discuss your down payment? Call us at (707) 252-2700.