Putting Together Your Down Payment

Many buyers qualify for a loan, but they don't have much to pay a down payment. Do you want to look into getting a new house, but aren't sure how you should put together your down payment?

Cut expenses and save. Be on the look-out for ways you can reduce your monthly expenditures to put away money for a down payment. You could also decide to enroll in an automatic savings plan at your bank to have a portion of your pay automatically transferred into a savings account. You might look into some big expenses in your budget 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. Perhaps you can get a second job and save your earnings. Additionally, you can make an exhaustive inventory of things 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 items for a garage or tag sale. Also, you can consider selling any investments you hold.

Tap into your retirement funds. Check the parameters of your retirement plan. Some people get down payment money from withdrawing funds from IRAs or borrowing from 401(k) programs. Be sure to find out about the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for assistance from members of your family. Many homebuyers are often lucky enough to receive down payment help from gracious parents and other family members who are able to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your own home.

Learn about housing finance agencies. Special loan programs are provided to buyers in certain circumstances, like low income homebuyers or people looking to improve houses in a certain part of town, among others. Financing through this kind of agency, you probably will be given a below market interest rate, down payment help and other advantages. These types of agencies may assist you with a reduced rate of interest, get you your down payment, and offer other benefits. The principal mission of non-profit housing finance agencies is build up the purchase of homes in specific parts of the city.

Learn about low-down and no-down mortgages.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income Americans qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to qualify for mortgage loans. FHA aids first-time homebuyers and others who would not be eligible for a conventional loan by themselves, by offering mortgage insurance to the private lenders. Down payment totals for FHA loans are below those for traditional mortgage loans, although these mortgages hold current interest rates. The down payment may go as low as 3 percent and the closing costs might be financed in the mortgage loan.

  • VA mortgage loans

    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 fixed interest rate, no down payment, and minimal closing costs. Even though the mortgage loans don't originate from the VA, the department verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You can fund your down payment with a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a portion of his home equity to help you get your down payment money. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a slightly higher rate with the loan financed by the seller.

No matter your method of pulling together your down payment, the thrill of owning your own home will be just as sweet!

Need to talk about your down payment? Give us a call at 952 417 8481.

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