Putting Together Your Down Payment

Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. Get started here

Slash your budget and build up savings. Be on the look-out for ways you can reduce your expenditures to save toward a down payment. Also, you can look into bank programs in which some of your paycheck is automatically transferred into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.

Work a second job and sell things you don't need. Perhaps you can find a second job and build up your earnings. In addition, you can put together a comprehensive inventory of items you can sell. Unworn gold jewelry can bring a good amount from local jewelry stores. Multiple small items might add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you own.

Tap into your retirement funds. Check the provisions of your particular program. You can pull out funds from a 401(k) plan for a down payment or withdraw from an IRA. Make sure to ask your plan representative about the tax ramifications, repayment terms, and early withdrawal penalties.

Ask for help from generous members of your family. Many homebuyers somtimes get help with their down payment help from gracious family members who are willing to help them get into their own home. Your family members may be inclined to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Special loan programs are extended to buyers in specific situations, such as low income buyers or future homeowners looking to improve homes in a specific area, among others. Financing through this kind of agency, you may receive a below market interest rate, down payment help and other advantages. Housing finance agencies may help eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit agencies to promote community in certain areas.

Learn about low-down and no-down mortgages.

• 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 part in aiding low to moderate-income Americans qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage. Interest rates for an FHA loan generally feature the market interest rate, while the down payment amounts with an FHA loan will be below those of conventional loans. The required down payment may go as low as 3 percent while the closing costs might be financed in the mortgage loan.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. While it's true that the mortgage loans are not actually provided by the VA, the office verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You may fund your down payment using a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. Instead of the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer finances the majority of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually this type of second mortgage will have higher interest.

No matter how you gather your down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss the best options for down payments? Call us at 305-967-7200.