Putting Together Your Down Payment

Many people who are looking to purchase a new house qualify for various loan programs, but they don't have much to pay the standard down payment. Below are a few ways to get together your down payment

Cut expenses and save. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. You may also decide to enroll in an automatic savings plan at your bank to have a portion of your pay automatically transferred into savings. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.

Work a second job and sell items you do not need. Perhaps you can get a second job and build up your earnings. In addition, you can put together an exhaustive inventory of items you can sell. Broken gold jewelry can be sold at local jewelers. A closetful of small items might add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow from your retirement funds. Explore the details for your particular plan. Some people get down payment money by withdrawing from IRAs or pulling funds out of their 401(k) programs. Be sure to ask your plan representative about the tax ramifications, your obligation for repayment, and penalties for withdrawing early.

Ask for assistance from family members. Many homebuyers somtimes get down payment assistance from caring family members who are anxious to help get them in their own home. Your family members may be eager to help you reach the goal of owning your first home.

Learn about housing finance agencies. These agencies provide special mortgage programs to low and moderate-income buyers, buyers with an interest in renovating a home in a targeted part of the city, and other groups as specified by the agency. With the help of this kind of agency, you probably will get an interest rate that is below market, down payment help and other incentives. Housing finance agencies may help you with a lower interest rate, get you your down payment, and provide other advantages. The central mission of non-profit housing finance agencies is to boost the purchase of homes in specific places.

Research no-down and low-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low and moderate-income individuals get mortgage loans. Part 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 new homebuyers who may not qualify for a conventional loan, to obtain a mortgage. Down payment amounts for FHA mortgages are lower than those with conventional mortgage loans, although these loans come with average interest rates. The down payment may go as low as three percent while the closing costs might be included in the mortgage.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a low fixed interest rate, no down payment, and limited closing costs. While the loans aren't actually financed by the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. Instead of the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you a portion of his home equity to assist you with your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Generally, this type of second mortgage has a higher rate of interest.

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

Need to talk about down payment options? Call us: 305-967-7200.