Building Your Down Payment

Many buyers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few straightforward ways to put together your down payment

Reduce expenses and save. Turn your budget inside out to uncover extra money to go toward your down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically transferred into a savings account every pay period. You would be wise to look into some big expenses in your budget that you can live without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your family vacation.

Work more and sell things you don't need. Look for a second job. This can be exhausting, but the temporary trial can help you get your down payment. In addition, you can put together an exhaustive list of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. A closetful of small things may add up to a fair amount at a garage or tag sale. You might also look into what any investments you hold could sell for.

Borrow money from a retirement plan. Investigate the provisions of your retirement program. It is possible to pull out money from a 401(k) for you down payment or get a withdrawal from an Individual Retirement Account. Be sure you comprehend the tax consequences, your obligation for repaying funds, and any penalties for withdrawing early.

Request a generous gift from family. First-time homebuyers somtimes get down payment assistance from caring parents and other family members who are eager to help them get into their own home. Your family members may be willing to help you reach the milestone of owning your own home.

Research housing finance agencies. Special mortgate loan programs are offered to buyers in certain situations, such as low income buyers or homebuyers looking to improve homes in a certain place, among others. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment help and other incentives. Housing finance agencies can assist you with a reduced rate of interest, help with your down payment, and provide other advantages. The main mission of non-profit housing finance agencies is promoting the purchase of homes in particular parts of the city.

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

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income families get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who may not be eligible for a typical mortgage loan by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA mortgage normally feature the going interest rate, while the down payment amounts with an FHA loan will be smaller than those of conventional loans. Closing costs may be included in the mortgage, while your down payment may be as low as 3% of the total amount.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a competitive interest rate, no down payment, and limited closing costs. Even though the VA doesn't actually finance the mortgage loans, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    You can finance a down payment with a second mortgage that closes along with the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a portion of his home equity to assist you with your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional lender and borrow the remainder from the seller. Often, this kind of second mortgage has a higher rate of interest.

No matter your method of getting together your down payment, the thrill of living in your own home will be just as great!

Want to discuss down payments? Call us: 7072522700.