Your Down Payment

Many buyers can qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Want to look into getting a new home, but don't know how you should put together your down payment?

Slash your budget and build up savings. Look for ways you can trim your monthly expenditures to set aside funds for a down payment. You also might enroll in an automatic savings plan at your bank to automatically have a specific portion of your paycheck transferred into your savings account. Some practical ways to put together funds include moving into housing that is less expensive, and staying home for your family vacation this year.

Sell items you don't really need and get a part-time job. Maybe you can get a second job to get your down payment money. You can also get creative about the items you can put up for sale. Multiple small items may add up to a fair amount at a garage or tag sale. You could also explore what your investments will bring if sold.

Borrow from a retirement plan. Investigate the parameters of your particular program. It is possible to borrow money from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Be sure you understand the tax consequences, your obligation for repaying funds, and any penalties for withdrawing early.

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

Contact housing finance agencies. These agencies provide special mortgage loans for low and moderate-income buyers, buyers with an interest in rehabilitating a home in a specific area, and other groups as specified by each agency. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other perks. Housing finance agencies may assist you with a reduced interest rate, get you your down payment, and offer other assistance. These non-profit programs were formed to build up community in specific places.

Research no-down and low-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income buyers get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who might not be eligible for a traditional loan by themselves, by offering mortgage insurance to private lenders. Down payment amounts for FHA mortgages are below those for traditional mortgage loans, even though these loans hold average rates of interest. Closing costs can be included in the mortgage, and the down payment can be as low as 3% of the purchase price.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. Although the VA doesn't actually issue the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of needing to put together the typical 20% down payment.

  • Carry-Back loans

    In the case of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a slightly higher interest rate with the loan from the seller.

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

Want to discuss your down payment? Call us: (772) 252-6724.