Your Down Payment

Many borrowers qualify for a mortgage loan, but they can't afford a large down payment. Do you want to look into getting 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 uncover ways you can cut expenses to go toward your down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a set amount from your paycheck moved into your savings account. You would be wise to look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your vacation.

Sell items you don't need and get a part-time job. Try to find a second job. This can be rough, but the temporary trial can provide your down payment money. You can also get creative about the items you can sell. Multiple small things might add up to a fair amount at a garage or tag sale. You could also research what your investments will bring if sold.

Borrow from retirement funds. Investigate the parameters of your particular program. Many people get down payment money from withdrawing funds from Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure you understand about any penalties, the effect this could have on income taxes, and repayment obligation.

Request a gift from family. First-time homebuyers are often fortunate enough to get down payment help from thoughtful parents and other family members who may be anxious to help get them in their own home. Your family members may be eager to help you reach the goal of having your first home.

Research housing finance agencies. These agencies provide special mortgage programs for moderate and low income homebuyers, buyers with an interest in renovating a house in a targeted part of the city, and additional groups as specified by each finance agency. With the help of a housing finance agency, you can get a below market interest rate, down payment help and other benefits. Housing finance agencies may help eligible homebuyers with a lower interest rate, get you your down payment, and offer other benefits. These non-profit programs exist to promote the value of homes in particular places.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    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 to moderate-income families get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgage loans. FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage loan. Interest rates for an FHA loan are normally the market interest rate, while the down payment for an FHA mortgage are smaller than those of conventional loans. Closing costs may be included in the mortgage, and the down payment could be as low as 3 percent of the total amount.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and provides a competitive rate of interest. While it's true that the mortgages are not actually financed by the VA, the department certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to loan you part of his own equity to help you get your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher rate with the loan financed by the seller.

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

Need to talk about the best options for down payments? Call us: 305-967-7200.