Your Down Payment

Lots of people who would like to purchase a new house qualify for a loan, but they don't have a lot of cash to pay a down payment. We have a few ideas

Reduce expenses and save. Be on the look-out for ways to reduce your expenses to set aside funds for a down payment. You may also decide to enroll in an automatic savings plan to have a percentage of your payroll automatically moved into savings. Some practical approaches to build up funds include moving into housing that is less expensive, and staying home for your family vacation this year.

Work a second job and sell items you do not need. Maybe you can find an additional job and build up your earnings. In addition, you can put together an exhaustive inventory of items you can sell. Unworn gold jewelry can bring a good price from local jewelry stores. A closetful of small items can add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you own.

Borrow from retirement funds. Investigate the parameters of your specific program. You can pull out funds from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Be sure you know about any penalties, the effect this may have on taxes, and repayment obligation.

Ask for a gift from family. Many buyers are sometimes lucky enough to get down payment assistance from giving parents and other family members who are prepared to help them get into their own home. Your family members may be pleased to help you reach the milestone of having your own home.

Research housing finance agencies. These types of agencies provide special mortgage loans to low and moderate-income homebuyers, buyers interested in sprucing up a house in a particular part of the city, and other specific types of buyers as defined by each finance agency. Working through a housing finance agency, you may get a below market interest rate, down payment assistance and other benefits. Housing finance agencies may help eligible buyers with a lower rate of interest, get you your down payment, and provide other advantages. The primary purpose of not-for-profit housing finance agencies is promoting the purchase of homes in targeted places.

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

  • 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 a significant part in assisting low to moderate-income buyers get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be able to qualify for a traditional loan on their own, by offering mortgage insurance to the lenders. Down payment amounts for FHA mortgages are less than those of traditional mortgages, although these loans come with current interest rates. Closing costs may be covered by the mortgage, while your down payment can be as low as 3% of the total.

  • VA loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can qualify for a VA loan, which usually offers a low interest rate, no down payment, and minimal closing costs. Even though the VA does not actually finance the loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than putting the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to loan you a portion of his home equity to help you get your down payment money. You would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Often, this kind of second mortgage will have higher interest.

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

Need to talk about down payments? Call us: 952 417 8481.

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