Putting Together Your Down Payment

Many borrowers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new house, but aren't sure how you should put together your down payment?

Slash the budget and build up savings. Turn your budget upside-down to discover ways you can cut expenses to go toward your down payment. There are bank programs in which a specific portion of your paycheck is automatically placed into a savings account each pay period. Some effective strategies to save additional 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. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can put together an exhaustive inventory of items you may be able to sell. Unused gold jewelry can bring a good price from local jewelers. Maybe you own collectibles you can sell at an auction website, or quality household items for a tag or garage sale. Also, you can look into selling any investments you own.

Borrow from your retirement funds. Research the details for your individual plan. It is possible to borrow money from a 401(k) plan for you down payment or make a withdrawal from an IRA. Be sure to learn about the tax ramifications, repayment terms, and any penalties for withdrawing early.

Ask for help from members of your family. Many buyers are often fortunate enough to receive down payment assistance from gracious parents and other family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the goal of owning your own home.

Learn about housing finance agencies. These agencies provide special mortgate loan programs- for low and moderate-income borrowers, buyers interested in rehabilitating a home within a targeted area, and other groups as defined by the finance agency. Working through this kind of agency, you may be given an interest rate that is below market, down payment assistance and other perks. Housing finance agencies may help you with a lower rate of interest, help with your down payment, and offer other benefits. These non-profit programs exist to build up the value of homes in certain areas.

Research no-down and low-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low to moderate-income buyers qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling buyers who might not be eligible for a conventional loan, to get home financing. Interest rates for an FHA loan normally feature the market interest rate, while the down payment amounts with an FHA mortgage are lower than those of conventional loans. The required down payment may be as low as 3 percent and the closing costs might be covered by the mortgage loan.

  • VA mortgages

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a reasonable rate of interest, no down payment, and reduced closing costs. While the loans don't originate from the VA, the department verfifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment using a second mortgage that closes with the first. Generally the piggyback loan is for 10 percent of the home's amount, and the first mortgage finances 80 percent. In contrast to the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Typically, this kind of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage 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? Give us a call at 952 417 8481.

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