Putting Together Your Down Payment

Many buyers can easily qualify for a loan, but they can't afford a large down payment. Do you want to buy a new house, but don't know how to get together a down payment?

Cut expenses and save. Look for ways you can reduce your expenses to set aside money for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically transferred into a savings account each pay period. You could 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 local for your vacation.

Sell items you don't need and get a second job. Try to find a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get serious about the possessions you really need and the items you can sell. Multiple small items might add up to a fair amount at a garage or tag sale. You might also explore what your investments will sell for.

Tap into your retirement funds. Research the specifics of your individual plan. It is possible to pull out funds from a 401(k) plan for a down payment or get a withdrawal from an Individual Retirement Account. Make sure you know about any penalties, the way this may affect on taxes, and repayment obligation.

Ask for assistance from members of your family. Many buyers somtimes get down payment help from giving parents and other family members who may be willing to help them get into their first home. Your family members may be willing to help you reach the milestone of having your first home.

Research housing finance agencies. These types of agencies provide special mortgage loans for low and moderate-income homebuyers, buyers interested in remodeling a residence within a particular area, and other particular types of buyers as defined by the finance agency. Financing through this type of agency, you may get an interest rate that is below market, down payment help and other incentives. These types of agencies may help you with a lower rate of interest, help with your down payment, and offer other benefits. These non-profit programs exist to build up the value of homes in certain neighborhoods.

Find out about low-down and no-down mortgage loans.

  • 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 assisting low and moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, making the buyers eligible for a mortgage loan. Down payment amounts for FHA loans are less than those for typical mortgage loans, although these mortgages hold current rates of interest. Closing costs may be included in the mortgage, and your down payment could be as low as 3 percent of the total amount.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a low interest rate, no down payment, and reduced closing costs. Even though the mortgages don't originate from the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may finance a down payment through a second mortgage that closes at the same time as the first. Most of the time, the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you part of his home equity to help you get your down payment funds. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this form of second mortgage will have a higher rate of interest.

The feeling of accomplishment will be the same, no matter which method you use to pull together the down payment. Your brand new home will be your reward!

Need to talk about down payments? Call us at (772) 252-6724.