Putting Together Your Down Payment

Many buyers can qualify for a loan, but they don't have a lot of money to pay a down payment. Here's where to get started

Reduce expenses and save. Be on the look-out for ways you can trim your expenditures to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically moved into your savings account. Some practical methods to build up funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Work more and sell items you don't need. Try to get a second job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can put together a comprehensive inventory of things you can sell. Unworn gold jewelry can bring a good amount from local jewelers. Maybe you have desirable items you can sell at an auction website, or household items for a tag or garage sale. Also, you can look into selling any investments you hold.

Tap into your retirement funds. Research the details of your individual plan. You may borrow money from a 401(k) plan for you down payment or get a withdrawal from an Individual Retirement Account. Make sure you comprehend the tax consequences, repayment terms, and early withdrawal penalties.

Request a generous gift from family. Many buyers are sometimes lucky enough to get down payment assistance from giving parents and other family members who are eager to help get them in their first home. Your family members may be pleased at the chance to help you reach the milestone of having your first home.

Learn about housing finance agencies. Provisional mortgate loan programs are given to homebuyers in specific situations, such as low income homebuyers or buyers planning to renovating houses in a particular area, among others. With the help of this type of agency, you may be given a below market interest rate, down payment assistance and other incentives. Housing finance agencies may help you with a lower rate of interest, get you your down payment, and provide other assistance. The central goal of not-for-profit housing finance agencies is promoting the purchase of homes in certain places.

Explore no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income buyers get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be able to qualify for a conventional loan by themselves, by providing mortgage insurance to the lenders. Interest rates with an FHA loan typically feature the current interest rate, while the down payment with an FHA mortgage will be smaller than those of conventional loans. Closing costs may be financed within the mortgage, while the down payment could be as low as 3 percent of the total.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan requires no down payment, has reduced closing costs, and offers a competitive rate of interest. Although the loans don't originate from the VA, the department verfifies applicants by providing 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 covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you a portion of his own equity to help you get your down payment funds. The buyer funds the majority of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a slightly higher interest rate on the loan financed by the seller.

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

Need to talk about down payment options? Call us at 561-395-4264.

Alternative Mortgage Group

80 SW 14 Ave
Boca Raton, FL 33486