Your Down Payment

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Many borrowers can easily qualify for various loan programs, but they don't have a lot of cash to pay a down payment. Here's where to get started

Reduce expenses and save. Scrutinize your budget to uncover extra money to save for your down payment. Also, you can look into bank programs through which a portion of your paycheck is automatically deposited into a savings account every pay period. Some effective ways to put together funds include moving into less expensive housing, and staying home for your vacation this year.

Work a second job and sell things you don't need. Try to find a second job. This can be exhausting, but the temporary trial can provide your down payment money. You can also get serious about the possessions you actually need and the things you can sell. A closet full of small things may add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you own.

Tap into retirement funds. Check the provisions of your retirement program. Many homebuyers get down payment money by withdrawing from their IRAs or pulling funds out of 401(k) programs. Make sure to learn about the tax consequences, repayment terms, and any penalties for withdrawing early.

Request a generous gift from your family. First-time homebuyers are sometimes lucky enough to get help with their down payment help from gracious parents and other family members who are willing to help them get into their own home. Your family members may be eager to help you reach the goal of buying your first home.

Research housing finance agencies. These agencies offer provisional loan programs to moderate and low income buyers, buyers with an interest in renovating a house in a particular area, and other groups as specified by each finance agency. With the help of this type of agency, you may be given a below market interest rate, down payment help and other perks. These kinds of agencies can assist eligible buyers with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit programs exist to build up community in certain areas.

Find out about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to get mortgage loans. FHA offers mortgage insurance to private lenders, enabling new homebuyers who will not be eligible for a traditional mortgage loan, to receive a mortgage. Interest rates with an FHA mortgage generally feature the market interest rate, while the down payment requirements for an FHA mortgage are lower than those of conventional loans. Closing costs can be included in the mortgage, while your down payment could be as low as 3 percent of the total.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterans and service people. This specialized loan requires no down payment, has limited closing costs, and provides a competitive interest rate. Even though the VA doesn't actually provide the mortgages, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage finances 80 percent. The borrower pays the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to lend you a portion of his home equity to assist you with your down payment funds. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remaining amount with the seller. Often, this type of second mortgage has higher interest.

The feeling of accomplishment will be the same, no matter which strategy you use to come up with your down payment. Your brand new home will be well worth it!

Want to discuss the best options for down payments? Call us at 4808226290.

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