Putting Together Your Down Payment

Lots of buyers qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Get started here

Tighten your belt and save. Be on the look-out for ways to trim your monthly expenditures to save toward a down payment. There are bank programs in which a portion of your paycheck is automatically transferred into a savings account every pay period. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your family vacation.

Work more and sell things you don't need. Maybe you can get an additional job and build up your earnings. You can also get serious about the possessions you really need and the items you can sell. You might own desirable items you can put up for sale at an online auction, or household items for a tag or garage sale. Also, you can consider selling any investments you hold.

Tap into your retirement funds. Investigate the provisions of your specific plan. Many people get down payment money by withdrawing what they need from their IRAs or borrowing from their 401(k) programs. Make sure you know about any penalties, the effect this will have on your income taxes, and repayment obligation.

Ask for help from members of your family. Many buyers somtimes receive down payment assistance from gracious parents and other family members who are anxious to help them get into their first home. Your family members may be inclined to help you reach the goal of owning your own home.

Learn about housing finance agencies. Special mortgate loan programs are provided to buyers in specific circumstances, like low income homebuyers or buyers planning to renovating homes in a particular place, among others. Working with a housing finance agency, you may receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies may help you with a reduced interest rate, get you your down payment, and offer other benefits. These non-profit agencies exist to boost the value of homes in specific areas.

Find out about low-down and no-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling buyers who may not be eligible for a traditional loan, to receive a mortgage. Interest rates with an FHA loan are generally the current interest rate, while the down payment for an FHA loan will be lower than those of conventional loans. Closing costs might be financed within the mortgage, and the down payment could be as low as 3 percent of the total.

  • VA loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans qualify for a VA loan, which typically offers a low fixed rate of interest, no down payment, and minimal closing costs. While the loans aren't actually provided by the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can finance a down payment using a second mortgage that closes with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to loan you a piece of his home equity to help you get your down payment funds. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you will pay a slightly higher rate on the loan financed by the seller.

The feeling of accomplishment will be the same, no matter which method you use to come up with your down payment. Your new home will be well worth it!

Need to talk about down payment options? Give us a call: 561-395-4264.


Alternative Mortgage Group

80 SW 14 Ave
Boca Raton, FL 33486