Your Down Payment

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Lots of borrowers can qualify for a loan, but they don't have much to pay a down payment. Want to buy a new house, but don't know how to put together a down payment?

Tighten your belt and save. Be on the look-out for ways you can trim your monthly expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into your savings account. Some practical ways to put together funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Work more and sell things you do not need. Maybe you can find an additional job and build up your earnings. You can also get creative about the items you may be able to put up for sale. 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.

Borrow from retirement funds. Research the details for your individual plan. You can borrow funds from a 401(k) for you down payment or get a withdrawal from an Individual Retirement Account. Make sure you understand the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for a gift from family. First-time buyers are often fortunate enough to get help with their down payment help from caring parents and other family members who may be willing to help get them in their own home. Your family members may be inclined to help you reach the goal of having your first home.

Contact housing finance agencies. Special mortgage programs are offered to buyers in certain circumstances, like low income purchasers or future homeowners looking to renovating homes in a targeted neighborhood, among others. With the help of this kind of agency, you may receive a below market interest rate, down payment help and other perks. Housing finance agencies may assist you with a reduced interest rate, get you your down payment, and provide other assistance. These non-profit programs were formed to promote home ownership in certain places.

Research no-down and low-down mortgages.

  • 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 an important role in assisting low and moderate-income families qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling new homebuyers who will not qualify for a conventional mortgage, to obtain financing. Down payment sums for FHA mortgages are lower than those for typical mortgages, although these mortgages have current interest rates. The required down payment may be 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 U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a competitive interest rate, no down payment, and limited closing costs. While the mortgages aren't actually financed by the VA, the office verifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You may finance a down payment using a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow a portion of the seller's home equity.. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and finance the remainder with the seller. Usually you will pay a somewhat higher interest rate with the loan from the seller.

No matter how you gather down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payments? Give us a call: (630) 534-5500.