Putting Together Your Down Payment

Many borrowers qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new home, but aren't sure how you should put together your down payment?

Slash the budget and build up savings. Turn your budget upside-down to find ways you can cut expenses to go toward your down payment. There are bank programs through which some of your paycheck is automatically transferred into savings each pay period. Some effective ways to save additional funds include moving into housing that is less expensive, and skipping your vacation for a year or two.

Work a second job and sell things you don't need. Maybe you can find a second job to get your down payment money. Additionally, you can make an exhaustive inventory of items you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. You may have desirable items you can put up for sale at an auction website, or household goods for a tag or garage sale. Also, you can look into selling any investments you own.

Borrow from a retirement plan. Investigate the provisions of your particular plan. Many homebuyers get down payment money by withdrawing what they need from Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you are clear about any penalties, the effect this may have on your taxes, and repayment terms.

Request a gift from your family. First-time buyers are often fortunate enough to receive help with their down payment help from giving parents and other family members who are anxious to help them get into their own home. Your family members may be inclined to help you reach the milestone of having your first home.

Contact housing finance agencies. These types of agencies extend provisional mortgate loan programs to moderate and low income borrowers, buyers interested in remodeling a house within a targeted area, and other certain types of buyers as specified by the finance agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other benefits. Housing finance agencies can assist eligible buyers with a lower rate of interest, get you your down payment, and provide other benefits. The primary mission of non-profit housing finance agencies is build up the purchase of homes in targeted parts of the city.

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

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low to moderate-income buyers qualify for mortgage loans. Part 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 a loan. Interest rates for an FHA loan are typically the market interest rate, while the down payment with an FHA loan are below those of conventional loans. Closing costs may be financed within the mortgage, and your down payment may be as low as 3% of the total amount.

  • VA mortgage loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a reasonable fixed interest rate, no down payment, and limited closing costs. Although the VA doesn't actually provide the loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    You can finance your down payment through 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 purchase price, while the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In the case of a seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a somewhat higher rate on the loan financed by the seller.

No matter your method of putting together your down payment money, the satisfaction of living in your own home will be just as great!

Want to discuss down payments? Give us a call at 561-395-4264.


Alternative Mortgage Group

80 SW 14 Ave
Boca Raton, FL 33486