Putting Together Your Down Payment

Many borrowers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few methods that will help you get together a down payment

Tighten your belt and save. Turn your budget upside-down to find ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which a specific portion of your take-home pay is automatically transferred into savings every pay period. Some effective methods to save additional funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Sell items you do not need and get a part-time job. Maybe you can find a second job and build up your earnings. Additionally, you can make an exhaustive inventory of things you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelry stores. Multiple small items might add up to a nice sum at a garage or tag sale. You could also look into what any investments you have may bring if sold.

Borrow from your retirement funds. Research the details for your individual plan. Many people get down payment money by withdrawing funds from IRAs or taking money out of their 401(k) plans. Make sure you understand the tax consequences, your obligation for repayment, and any early withdrawal penalties.

Ask for a generous gift from your family. First-time homebuyers are sometimes fortunate enough to receive help with their down payment assistance from giving parents and other family members who are willing to help them get into their first home. Your family members may be willing to help you reach the milestone of owning your own home.

Learn about housing finance agencies. These types of agencies provide provisional mortgate loan programs to moderate and low income buyers, buyers interested in remodeling a residence in a specific area, and additional particular types of buyers as defined by each agency. Working with a housing finance agency, you can get an interest rate that is below market, down payment help and other advantages. Housing finance agencies may help you with a lower rate of interest, help with your down payment, and offer other advantages. The principal purpose of non-profit housing finance agencies is build up the purchase of homes in specific places.

Find out about low-down and no-down mortgage loan programs.

  • 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 a vital part in aiding low to moderate-income Americans get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who might not be eligible for a typical loan on their own, by providing mortgage insurance to the lenders. Down payment amounts for FHA mortgages are less than those of traditional mortgage loans, although these loans come with average interest rates. The down payment can go as low as three percent and the closing costs could be covered by the mortgage loan.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a competitive interest rate, no down payment, and reduced closing costs. Even though the mortgages are not actually issued by the VA, the office certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment with a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In the case of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and finance the remaining amount with the seller. Usually you will pay a slightly higher interest rate on the loan from the seller.

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

Need to talk about the best options for down payments? Call us at (434) 975-5626.