Building Your Down Payment

Many buyers qualify for several different kinds of mortgages, but they don't have a lot of money to pay the standard down payment. Want to look into getting a new house, but don't know how you should put together a down payment?

Tighten your belt and save. Turn your budget upside-down to discover extra money 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 a savings account. You might look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay close to home for your family vacation.

Work more and sell things you do not need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you may be able to put up for sale. Maybe you have collectibles you can sell at an auction website, or quality household items for a tag or garage sale. You could also explore what any investments you own will sell for.

Borrow from retirement funds. Explore the details of your particular plan. Some people get down payment money by withdrawing from their IRAs or borrowing from 401(k) plans. Make sure you know about any penalties, the effect this could have on income taxes, and repayment obligation.

Ask for a gift from your family. First-time homebuyers somtimes receive down payment help from thoughtful family members who may be prepared to help get them in their own home. Your family members may be inclined to help you reach the milestone of having your own home.

Contact housing finance agencies. These agencies provide provisional loan programs for moderate and low income buyers, buyers with an interest in renovating a home in a particular part of the city, and additional certain types of buyers as defined by each agency. With the help of a housing finance agency, you can get a below market interest rate, down payment help and other perks. These types of agencies can assist you with a lower rate of interest, help with your down payment, and offer other assistance. The main mission of non-profit housing finance agencies is promoting residential ownership in certain places.

Research no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who may not be eligible for a conventional mortgage loan on their own, by providing mortgage insurance to private lenders. Down payment requirements for FHA mortgages are below those with traditional mortgage loans, even though these mortgages hold current interest rates. The down payment may be as low as three percent while the closing costs could be financed in the mortgage loan.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can qualify for a VA loan, which typically offers a competitive fixed rate of interest, no down payment, and limited closing costs. Even though the mortgage loans aren't actually issued by the VA, the office certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage finances 80 percent. In contrast to the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to lend you part of his own equity to help you get your down payment funds. The buyer finances the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Often, this kind of second mortgage has a higher rate of interest.

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

Need to talk about the best options for down payments? Call us at (707) 252-2700.