Your Down Payment

Many borrowers qualify for a mortgage loan, but they don't have a lot of money to put up the standard down payment. Below are a few straightforward methods that will help you put together a down payment

Cut expenses and save. Look for ways to trim your monthly expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan to have a percentage of your pay automatically transferred into savings. You could look into some big expenses in your spending history that you can live without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your vacation.

Work a second job and sell items you do not need. Look for an additional job. This can be rough, but the temporary trial can help you get your down payment. You can also get creative about the things you migh be able to sell. A closetful of small items could add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow from retirement funds. Research the specifics of your particular plan. Some homebuyers get down payment money from withdrawing from IRAs or taking money out of their 401(k) plans. Make sure you are clear about any penalties, the effect this may have on your income taxes, and repayment obligation.

Ask for a gift from family. Many buyers are often fortunate enough to receive help with their down payment help from giving parents and other family members who are willing to help them get into their first home. Your family members may be pleased to help you reach the goal of buying your first home.

Research housing finance agencies. These types of agencies offer provisional mortgage programs for moderate and low income borrowers, buyers interested in remodeling a house within a targeted area, and additional groups as specified by the agency. Working with a housing finance agency, you probably will get a below market interest rate, down payment help and other benefits. Housing finance agencies can assist you with a reduced interest rate, help with your down payment, and offer other advantages. The main goal of non-profit housing finance agencies is to boost the purchase of homes in particular parts of the city.

Explore no-down and low-down mortgage loan programs.

  • FHA loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low and moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA aids first-time homebuyers and others who might not be eligible for a conventional mortgage loan by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA mortgage normally feature the market interest rate, but the down payment requirements with an FHA mortgage are below those of conventional loans. Closing costs might be covered by the mortgage, and the down payment might be as low as 3% of the total.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a competitive fixed interest rate, no down payment, and minimal closing costs. Even though the VA does not finance the mortgage loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The borrower 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 part of his home equity to assist you with your down payment funds. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remaining amount with the seller. Typically you will pay a somewhat higher rate on the loan from the seller.

The feeling of accomplishment will be the same, no matter which method you use to get together your down payment. Your new home will be your reward!

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