Your Down Payment

Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new house, but don't know how you should get together your down payment?

Slash the budget and build up savings. Be on the look-out for ways to reduce your expenditures to set aside funds for a down payment. You might also try enrolling in an automatic savings plan to have a percentage of your pay automatically transferred into savings. Some practical ways to save additional funds include moving into a residence that is less expensive, and skipping your family vacation for a year or two.

Sell things you don't need and find a part-time job. Maybe you can get an additional job to get your down payment money. In addition, you can make a comprehensive inventory of things you can sell. Broken gold jewelry can be sold at local jewelry stores. Multiple small items might add up to a fair amount at a garage or tag sale. You could also research what any investments you hold may sell for.

Borrow money from a retirement plan. Explore the details of your individual plan. Many homebuyers get down payment money from withdrawing what they need from their Individual Retirement Accounts or borrowing from 401(k) programs. Make sure you understand the tax consequences, your obligation for repayment, and possible early withdrawal penalties.

Ask for assistance from generous family members. First-time homebuyers somtimes receive help with their down payment help from caring parents and other family members who are eager to help them get into their own home. Your family members may be eager to help you reach the goal of having your own home.

Contact housing finance agencies. Provisional loan programs are offered to homebuyers in specific circumstances, such as low income buyers or future homeowners planning to renovating homes in a certain part of town, among others. With the help of this type of agency, you can get a below market interest rate, down payment assistance and other benefits. Housing finance agencies may help you with a reduced rate of interest, get you your down payment, and offer other assistance. The main goal of non-profit housing finance agencies is build up residential ownership in targeted places.

Find out about low-down and no-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low to moderate-income Americans get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for financing. Interest rates for an FHA loan are typically the market interest rate, but the down payment requirements with an FHA mortgage will be lower than those of conventional loans. The required down payment can go as low as 3 percent while the closing costs could be covered by the mortgage loan.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan does not require a down payment, has limited closing costs, and provides a competitive interest rate. Even though the mortgages aren't actually financed by the VA, the department certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Often the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you will pay a somewhat higher rate on the loan financed by the seller.

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

Want to discuss down payments? Call us at 952 417 8481.

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