Building Your Down Payment

Many buyers can qualify for various loan programs, but they can't afford a large down payment. Below are a few ways to get together your down payment

Slash the budget and build up savings. Be on the look-out for ways you can trim your monthly expenditures to set aside money for a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically transferred into savings every pay period. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you might move into less expensive housing, or stay local for your annual vacation.

Work a second job and sell things you don't need. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can make an exhaustive inventory of things you can sell. Unused gold jewelry can bring a good price from local jewelry stores. Maybe you have desirable items you can put up for sale on an online auction, or quality household goods for a tag or garage sale. Also, you can look into selling any investments you own.

Tap into your retirement funds. Check the parameters of your specific program. Some people get down payment money by withdrawing funds from their Individual Retirement Accounts or borrowing from their 401(k) programs. Be sure to find out about the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for help from generous family members. Many homebuyers somtimes receive down payment assistance from thoughtful family members who are prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of having your first home.

Research housing finance agencies. These types of agencies provide provisional loan programs for low and moderate-income homebuyers, buyers with an interest in rehabilitating a residence in a targeted part of the city, and additional groups as specified by each finance agency. With the help of this kind of agency, you may get a below market interest rate, down payment help and other advantages. Housing finance agencies can help you with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit programs were formed to build up home ownership in certain areas.

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

  • 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 buyers qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting home financing. FHA aids first-time buyers and others who might not be able to qualify for a typical mortgage loan by themselves, by offering mortgage insurance to the private lenders. Down payment requirements for FHA mortgages are smaller than those of conventional mortgage loans, although these loans have current rates of interest. The required down payment can go as low as three percent while the closing costs could be covered by the mortgage loan.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan requires no down payment, has reduced closing costs, and offers a competitive rate of interest. While it's true that the loans aren't actually provided by the VA, the office certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Typically you'll pay a slightly higher interest rate on the loan from the seller.

No matter how you gather your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!

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