Putting Together Your Down Payment

Many buyers qualify for a mortgage loan, but they don't have a large sum of cash to pay the standard down payment. Get started here

Cut expenses and save. Be on the look-out for ways to reduce your expenditures to save toward a down payment. There are bank programs through which a portion of your take-home pay is automatically transferred into savings every pay period. Some practical methods to save additional funds include moving into housing that is less expensive, and staying local for your vacation this year.

Work more and sell things you do not need. Maybe you can get an additional job and build up your earnings. In addition, you can put together an exhaustive inventory of items you may be able to sell. Unused gold jewelry can be sold at local jewelers. You may own collectibles you can put up for sale at an online auction, or quality household goods for a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow from your retirement funds. Investigate the provisions of your particular program. You can borrow funds from a 401(k) plan for a down payment or make a withdrawal from an IRA. Make sure you understand about any penalties, the way this will affect on your income taxes, and repayment terms.

Ask for help from generous family members. First-time homebuyers somtimes get help with their down payment assistance from caring family members who may be anxious to help get them in their own home. Your family members may be pleased at the chance to help you reach the goal of owning your first home.

Research housing finance agencies. These types of agencies offer special loan programs for moderate and low income borrowers, buyers interested in renovating a house in a particular part of the city, and additional groups as defined by the finance agency. Working with a housing finance agency, you can be given an interest rate that is below market, down payment help and other incentives. These types of agencies can assist eligible homebuyers with a lower interest rate, help with your down payment, and provide other benefits. The central mission of non-profit housing finance agencies is promoting the purchase of homes in targeted areas.

Explore no-down and low-down mortgages.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income buyers qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to qualify for home financing. FHA aids first-time buyers and others who may not be able to qualify for a traditional loan on their own, by offering mortgage insurance to lenders. Interest rates for an FHA mortgage are generally the going interest rate, while the down payment requirements for an FHA loan will be lower than those of conventional loans. The required down payment may go as low as three percent while the closing costs could be covered by the mortgage.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a competitive rate of interest, no down payment, and limited closing costs. Even though the VA doesn't finance the mortgages, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. In most cases the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

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

No matter your strategy of putting together down payment money, the satisfaction of owning your own home will be just as sweet!

Need to talk about down payments? Give us a call at 305-967-7200.