Your Down Payment

Many buyers can qualify for a mortgage loan, but they can't afford a large down payment. Here are a few tips:

Cut expenses and save. Look for ways you can reduce your monthly expenditures to set aside funds for a down payment. There are bank programs through which a portion of your paycheck is automatically placed into a savings account every pay period. You could look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your family vacation.

Work more and sell items you don't need. Try to find a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the items you could be able to sell. You might own collectibles you can sell at an auction website, or household items for a tag or garage sale. You can also research what any investments you hold may sell for.

Borrow from a retirement plan. Research the details of your particular plan. You can pull out money from a 401(k) plan for you down payment or make a withdrawal from an Individual Retirement Account. Be sure you know about any penalties, the effect this will have on income taxes, and repayment obligation.

Ask for help from generous family members. Many buyers are often fortunate enough to receive help with their down payment assistance from gracious family members who may be able to help them get into their first home. Your family members may be pleased to help you reach the goal of having your own home.

Research housing finance agencies. These agencies provide provisional mortgage programs to moderate and low income buyers, buyers with an interest in remodeling a residence in a particular part of the city, and other groups as specified by the agency. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can assist you with a reduced interest rate, get you your down payment, and offer other assistance. The central mission of not-for-profit housing finance agencies is boosting home ownership in specific areas.

Research no-down and low-down mortgages.

  • FHA loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income individuals get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get home financing. FHA assists first-time homebuyers and others who would not be able to qualify for a typical mortgage on their own, by providing mortgage insurance to private lenders. Down payment totals for FHA loans are lower than those of conventional mortgages, even though these loans hold average interest rates. Closing costs might be covered by the mortgage, and the down payment may be as low as 3 percent of the total amount.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has reduced closing costs, and offers a competitive rate of interest. Although the mortgages are not actually financed by the VA, the office verfifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You can finance your down payment with a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the buyer 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 lender and borrow the remainder from the seller. Usually you will pay a somewhat higher interest rate on the loan from the seller.

No matter your strategy of putting together your down payment, the thrill of living in your own home will be just as great!

Want to discuss the best options for down payments? Call us at 866-300-1550.

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