Building Your Down Payment

Lots of folks who are looking to buy a new house qualify for several different kinds of mortgages, but they don't have a lot of cash to put up a down payment. Here's where to get started

Tighten your belt and save. Turn your budget inside out to uncover extra money to go toward your down payment. Also, you can look into bank programs through which some of your paycheck is automatically placed into savings every pay period. Some effective methods to save additional funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Sell things you don't really need and find a second job. Perhaps you can find an additional job to get your down payment money. You can also get creative about the items you can put up for sale. Maybe you have desirable items you can sell at an online auction, or household goods for a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow from retirement funds. Explore the specifics of your individual plan. Many people get down payment money from withdrawing funds from their Individual Retirement Accounts or getting money out of 401(k) programs. Make sure you are clear about any penalties, the effect this will have on your income taxes, and repayment terms.

Ask for a generous gift from your family. Many buyers somtimes get down payment assistance from gracious family members who may be anxious to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your first home.

Research housing finance agencies. These agencies provide provisional mortgage programs for moderate and low income buyers, buyers with an interest in renovating a home within a targeted area, and other groups as specified by the agency. With the help of this type of agency, you may get a below market interest rate, down payment help and other advantages. These types of agencies may assist eligible buyers with a reduced rate of interest, get you your down payment, and provide other benefits. These non-profit agencies exist to promote community in certain areas.

Learn about low-down and no-down mortgages.

  • FHA 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 mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgages. FHA provides mortgage insurance to private lenders, enabling buyers who may not be eligible for a conventional loan, to receive a mortgage. Down payment totals for FHA loans are lower than those for typical mortgage loans, even though these mortgages have average rates of interest. Closing costs may be covered by the mortgage, while the down payment can be as low as 3% of the total amount.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive interest rate. Even though the mortgages are not actually issued by the VA, the office verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Generally the piggyback loan is for 10 percent of the purchase amount, and the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    We a seller carries back a second mortgage, the seller loans you part of his or her home equity. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and finance the remainder with the seller. Generally, this type of second mortgage will have a higher rate of interest.

The satisfaction will be the same, no matter how you manage to put together the down payment. Your brand new home will be worth it!

Need to talk about down payment options? Give us a call: 866-300-1550.

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