Building Your Down Payment

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Lots of buyers can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few straightforward methods that will help you get together your down payment

Tighten your belt and save. Be on the look-out for ways to trim your monthly expenses to set aside funds for a down payment. There are bank programs in which a specific portion of your take-home pay is automatically placed into savings each pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or skip a vacation.

Work more and sell items you don't need. Maybe you can get an additional job to get your down payment money. You can also get creative about the items you may be able to sell. A closet full of small items might add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.

Borrow your down payment from your retirement plan. Investigate the parameters of your particular program. Some people get down payment money by withdrawing funds from their Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you understand the tax consequences, your obligation for repaying funds, and early withdrawal penalties.

Request a gift from your family. Many buyers are sometimes fortunate enough to get help with their down payment assistance from giving parents and other family members who may be able to help them get into their first home. Your family members may be pleased to help you reach the goal of having your first home.

Research housing finance agencies. Special mortgage loans are given to buyers in certain circumstances, such as low income buyers or buyers planning to renovating houses in a specific place, among others. Financing with this type of agency, you probably will receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can assist eligible buyers with a reduced rate of interest, get you your down payment, and offer other benefits. These non-profit agencies to promote community in certain neighborhoods.

Research no-down and low-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low and moderate-income families get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for mortgages. FHA assists first-time buyers and others who may not be able to qualify for a typical mortgage on their own, by providing mortgage insurance to lenders. Interest rates with an FHA mortgage generally feature the current interest rate, while the down payment with 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 could be included in the mortgage loan.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterans and service people. This specialized loan does not require a down payment, has reduced closing costs, and provides a competitive interest rate. While the VA doesn't actually issue the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, rather than needing to pull together the usual 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the seller loans you part of his or her home equity. You would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Usually this kind of second mortgage has a higher rate of interest.

No matter your method of pulling together your down payment money, the satisfaction of living in your own home will be just as sweet!

Need to talk about down payments? Give us a call: 872-222-6178.

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