Your Down Payment

Many buyers can qualify for various loan programs, but they can't afford a large down payment. Here's where to get started

Reduce expenses and save. Turn your budget upside-down to uncover ways you can cut expenses to save for your down payment. You also might enroll in an automatic savings plan to have a portion of your payroll automatically moved into savings. Some practical approaches to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.

Work more and sell items you do not need. Maybe you can find a second job to get your down payment money. Additionally, you can put together a comprehensive list of things you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. Multiple small items might add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you own.

Borrow from retirement funds. Research the specifics of your individual plan. Some homebuyers get down payment money from withdrawing from Individual Retirement Accounts or borrowing from 401(k) programs. Be sure you comprehend the tax consequences, your obligation for repaying funds, and penalties for withdrawing early.

Ask for a gift from your family. First-time buyers somtimes receive down payment assistance from gracious parents and other family members who are eager to help them get into their first home. Your family members may be pleased to help you reach the goal of having your first home.

Contact housing finance agencies. Provisional loan programs are offered to homebuyers in specific circumstances, such as low income purchasers or people planning to improve homes in a certain part of town, among others. Financing through this type of agency, you probably will receive a below market interest rate, down payment help and other benefits. These kinds of agencies may assist you with a lower rate of interest, help with your down payment, and provide other assistance. These non-profit agencies were established to build up the value of homes in particular places.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low and moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get home financing. FHA provides mortgage insurance to private lenders, enabling buyers who will not qualify for a traditional loan, to get home financing. Down payment amounts for FHA loans are less than those of typical mortgages, even though these mortgages have average rates of interest. The required down payment can be as low as 3 percent while the closing costs can be covered by the mortgage.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This particular loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. Although the VA doesn't finance the loans, it does issue a certificate of eligibility to qualify for a VA loan.

  • Piggy-back loans

    You can fund your down payment using a second mortgage that closes with the first. Generally the piggyback loan is for 10 percent of the purchase amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, rather than having to put together 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. You would borrow the largest portion of the purchase price from a traditional mortgage lender and borrow the remainder from the seller. Usually you'll pay a somewhat higher interest rate on the loan financed by the seller.

No matter your strategy of pulling together your down payment, the thrill of reaching the goal of owning your own home will be just as great!

Need to talk about your down payment? Call us at 305-967-7200.