Building Your Down Payment

Lots of borrowers can easily qualify for various loan programs, but they don't have a lot of money to put up a down payment. Get started here

Tighten your belt and save. Scrutinize the budget to find ways you can cut expenses to save for your down payment. You may also decide to enroll in an automatic savings plan to have a percentage of your pay automatically deposited into savings. Some practical approaches to put together funds include moving into a residence that is less expensive, and skipping a year's vacation.

Sell items you don't really need and find a second job. Try to find a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. Additionally, you can put together a comprehensive list of things you can sell. Unused gold jewelry can bring a good price from local jewelers. You might have desirable items you can put up for sale on an auction website, or quality household items for a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow from a retirement plan. Check the provisions of your particular plan. You may borrow funds from a 401(k) for a down payment or make a withdrawal from an Individual Retirement Account. You will want to ensure you are knowledgable about any penalties, the way this will affect on your income taxes, and repayment obligation.

Request a generous gift from family. First-time homebuyers are sometimes lucky enough to get down payment assistance from gracious family members who may be eager to help get them in their own home. Your family members may be pleased to help you reach the goal of owning your own home.

Research housing finance agencies. Special mortgate loan programs are offered to homebuyers in certain circumstances, like low income purchasers or people planning to remodel homes in a particular area, among others. With the help of this type of agency, you probably will get a below market interest rate, down payment help and other perks. Housing finance agencies can help you with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit programs exist to build up community in particular areas.

Learn about low-down and no-down mortgage loan programs.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low to moderate-income buyers get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling new homebuyers who may not be eligible for a conventional mortgage loan, to obtain home financing. Interest rates for an FHA loan are usually the going interest rate, but the down payment amounts with an FHA mortgage will be smaller than those of conventional loans. The required down payment can go as low as 3 percent while the closing costs may be financed in the mortgage.

  • VA mortgage loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a low fixed interest rate, no down payment, and minimal closing costs. While the mortgage loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment through a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, rather than having to pull together the usual 20% down payment.

  • Carry-Back loans

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

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

Want to discuss down payment options? Give us a call at 866-300-1550.

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