Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a lot of cash to put up a down payment. Below are a few straightforward ways to put together a down payment

Slash the budget and build up savings. Be on the look-out for ways to trim your expenses to put away money for a down payment. There are bank programs in which some of your paycheck is automatically deposited into savings each pay period. You could 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 decide to move into less expensive housing, or stay close to home for your annual vacation.

Sell items you do not really need and get a part-time job. Look for an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the things you can put up for sale. Multiple small items might add up to a nice sum at a garage or tag sale. You might also research what your investments may sell for.

Borrow funds from a retirement plan. Explore the details for your particular plan. Some people get down payment money from withdrawing from Individual Retirement Accounts or pulling funds out of 401(k) plans. Be sure to find out about the tax consequences, repayment terms, and possible penalties for withdrawing early.

Ask for help from generous family members. Many homebuyers are sometimes lucky enough to receive down payment assistance from gracious parents and other family members who are anxious to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of having your own home.

Contact housing finance agencies. Special mortgate loan programs are given to homebuyers in certain situations, such as low income purchasers or homebuyers looking to remodel homes in a particular neighborhood, among others. Working with this kind of agency, you can be given a below market interest rate, down payment assistance and other perks. Housing finance agencies may assist you with a lower rate of interest, help with your down payment, and provide other benefits. The principal purpose of not-for-profit housing finance agencies is to promote the purchase of homes in certain places.

Research no-down and low-down mortgage loans.

  • 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 significant role in helping low to moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for financing. Down payment requirements for FHA loans are below those of conventional mortgages, although these loans come with current interest rates. Closing costs can be included in the mortgage, while the down payment can be as low as 3% of the purchase price.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. Although the mortgages don't originate from the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can finance your down payment through a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. You would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remainder with the seller. Usually this form of second mortgage has a higher rate of interest.

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

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