Building Your Down Payment

Lots of folks who are looking to purchase a new home qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Do you want to buy a new house, but aren't sure how you should put together your down payment?

Tighten your belt and save. Scrutinize your budget to find ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which some of your paycheck is automatically placed into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your annual vacation.

Work more and sell things you don't need. Look for a second job. This can be exhausting, but the temporary trial can help you get your down payment. Additionally, you can make an exhaustive inventory of things you may be able to sell. Unused gold jewelry can bring a good amount from local jewelers. Maybe you own desirable items you can put up for sale on an auction website, or quality household items for a tag or garage sale. You might also research what your investments may bring if sold.

Tap into your retirement funds. Check the parameters of your retirement plan. You can borrow money 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, your obligation for repaying funds, and early withdrawal penalties.

Ask for assistance from family members. Many buyers somtimes receive down payment assistance from gracious family members who are able to help get them in their own home. Your family members may be pleased to help you reach the goal of buying your first home.

Contact housing finance agencies. These types of agencies extend provisional loan programs to moderate and low income borrowers, buyers with an interest in sprucing up a home in a particular area, and other particular kinds of buyers as defined by the agency. With the help of this kind of agency, you may get a below market interest rate, down payment help and other incentives. These types of agencies may assist you with a reduced interest rate, get you your down payment, and offer other assistance. These non-profit agencies were formed to promote home ownership in particular places.

Learn about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low and moderate-income Americans qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages. FHA helps first-time buyers and others who may not be eligible for a traditional loan by themselves, by providing mortgage insurance to private lenders. Interest rates for an FHA loan are usually the going interest rate, but the down payment with an FHA loan are below those of conventional loans. The required down payment may go as low as 3 percent and the closing costs may be included in the mortgage loan.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people qualify for a VA loan, which generally offers a competitive fixed rate of interest, no down payment, and minimal closing costs. While the mortgage loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You can fund your down payment using a second mortgage that closes with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than putting the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you some of his own equity to assist you with your down payment funds. You would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Typically you'll pay a somewhat higher rate with the loan from the seller.

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

Want to discuss your down payment? Call us: 305-967-7200.