Putting Together Your Down Payment

Many buyers can easily 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. Look for ways to trim your monthly expenditures to set aside funds for a down payment. Also, you can look into bank programs in which some of your paycheck is automatically transferred into a savings account each pay period. You could look into some big expenses in your spending history that you can give up, 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 family vacation.

Sell items you do not really need and get a second job. Maybe you can get an additional job and save your earnings. Additionally, you can make an exhaustive list of things you can sell. Unused gold jewelry can bring a good price from local jewelers. Maybe you have collectibles you can put up for sale at an auction website, or household items for a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow funds from your retirement plan. Explore the specifics for your individual plan. Some people get down payment money by withdrawing what they need from their IRAs or getting money out of their 401(k) plans. Be sure to learn about the tax consequences, repayment terms, and possible early withdrawal penalties.

Ask for a generous gift from your family. Many buyers are often lucky enough to receive down payment help from caring parents and other family members who may be willing to help them get into their own home. Your family members may be happy at the chance to help you reach the goal of buying your own home.

Learn about housing finance agencies. These agencies offer special mortgage loans for moderate and low income homebuyers, buyers with an interest in renovating a home within a targeted area, and additional certain types of buyers as defined by each finance agency. Working with this kind of agency, you probably will be given a below market interest rate, down payment help and other benefits. These types of agencies can assist you with a reduced interest rate, help with your down payment, and provide other assistance. These non-profit programs exist to boost the value of homes in certain areas.

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

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low and moderate-income Americans qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to get home financing. FHA offers mortgage insurance to the private lenders, making the buyers eligible for financing. Down payment requirements for FHA mortgages are less than those with traditional mortgages, even though these loans come with average rates of interest. Closing costs can be covered by the mortgage, while the down payment may be as low as 3% of the purchase price.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a low fixed rate of interest, no down payment, and limited closing costs. While the VA does not issue the loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than needing to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you a portion of his own equity to help you get your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remainder from the seller. Usually this type of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your new home will be your reward!

Want to discuss down payments? Call us: 561-395-4264.