Putting Together Your Down Payment

Lots of folks who would like to buy a new house can easily qualify for a mortgage loan, but they can't afford a large down payment. Here's where you start

Tighten your belt and save. Scrutinize the budget to uncover extra money to go toward your down payment. You also might enroll in an automatic savings plan to have a percentage of your pay automatically moved into savings. Some practical strategies to save additional funds include moving into less expensive housing, and staying home for your family vacation this year.

Work a second job and sell things you do not need. Look for a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you may be able to put up for sale. A closetful of small items can add up to a nice sum at a garage or tag sale. You might also look into what your investments could sell for.

Borrow funds from a retirement plan. Check the provisions of your specific program. It is possible to pull out funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Be sure to ask your plan representative about the tax ramifications, repayment terms, and penalties for withdrawing early.

Request a gift from family. First-time buyers are sometimes fortunate enough to get down payment assistance from gracious parents and other family members who may be eager to help get them in their first home. Your family members may be eager to help you reach the milestone of owning your first home.

Research housing finance agencies. Provisional mortgage loans are given to homebuyers in specific circumstances, such as low income purchasers or homebuyers planning to improve homes in a targeted neighborhood, among others. With the help of this kind of agency, you can get an interest rate that is below market, down payment help and other advantages. Housing finance agencies can help you with a lower interest rate, help with your down payment, and provide other advantages. The central goal of not-for-profit housing finance agencies is promoting residential ownership in certain parts of the city.

Find out about low-down and no-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income buyers qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in qualifying for mortgages. FHA assists first-time homebuyers and others who may not be able to qualify for a conventional mortgage loan by themselves, by providing mortgage insurance to private lenders. Interest rates for an FHA loan normally feature the market interest rate, but the down payment amounts for an FHA mortgage will be below those of conventional loans. The down payment may be as low as three percent while the closing costs can be financed in the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and provides the benefit of a competitive rate of interest. While the loans are not actually issued by the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to loan you a portion of his own equity to help you get your down payment funds. You would finance the majority of the purchase price with a traditional lender and borrow the remaining amount from the seller. Typically, this kind of second mortgage will have higher interest.

The feeling of accomplishment 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 payment options? Call us at 561-395-4264.