Your Down Payment

Lots of buyers can qualify for various loan programs, but they don't have a lot of money to put up a down payment. Do you want to look into getting a new home, but aren't sure how you should get together your down payment?

Tighten your belt and save. Turn your budget upside-down to find extra money to save for your down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a specific amount from your paycheck deposited into savings. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay close to home for your family vacation.

Sell things you do not really need and find a part-time job. Maybe you can find a second job to get your down payment money. You can also get serious about the possessions you really need and the items you could be able to sell. A closetful of small things might add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow your down payment from your retirement plan. Research the specifics of your particular plan. Some homebuyers get down payment money from withdrawing what they need from Individual Retirement Accounts or borrowing from their 401(k) programs. Be sure you understand the tax consequences, your obligation for repayment, and possible penalties for withdrawing early.

Ask for a generous gift from family. Many homebuyers are often fortunate enough to get help with their down payment assistance from giving parents and other family members who are willing to help get them in their first home. Your family members may be willing to help you reach the goal of owning your own home.

Learn about housing finance agencies. Provisional mortgage programs are extended to buyers in certain situations, such as low income purchasers or people looking to renovating homes in a certain neighborhood, among others. With the help of this type of agency, you may receive an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies can help eligible buyers with a reduced rate of interest, get you your down payment, and offer other assistance. These non-profit agencies were formed to build up home ownership in specific places.

Learn about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income families get mortgage loans. Part 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 conventional mortgage on their own, by offering mortgage insurance to lenders. Down payment requirements for FHA loans are below those with typical mortgage loans, although these mortgages have average rates of interest. Closing costs might be financed within the mortgage, and your down payment might be as low as 3% of the total.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan requires no down payment, has limited closing costs, and offers a competitive interest rate. Although the mortgages don't originate from the VA, the department certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment using a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's price, and the first mortgage covers 80 percent. 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" agreement, the seller commits to loan you some of his own equity to assist you with your down payment funds. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher interest rate on the loan financed by the seller.

The satisfaction will be the same, no matter which method you use to come up with your down payment. Your brand new home will be your reward!

Want to discuss the best options for down payments? Call us at 561-395-4264.