Your Down Payment

Lots of buyers can easily qualify for various loan programs, but they don't have much to put up a down payment. Here's where to get started

Tighten your belt and save. Look for ways you can reduce your expenditures to set aside funds for a down payment. There are bank programs through which some of your paycheck is automatically transferred into savings every pay period. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your family vacation.

Sell things you don't need and find a part-time job. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. In addition, you can make an exhaustive inventory of things you may be able to sell. Unworn gold jewelry can be sold at local jewelers. A closetful of small things might add up to a fair amount at a garage or tag sale. You can also research what any investments you own will bring if sold.

Borrow from retirement funds. Check the provisions of your retirement program. Many people get down payment money from withdrawing what they need from Individual Retirement Accounts or borrowing from 401(k) plans. Make sure you know about any penalties, the way this could affect on taxes, and repayment terms.

Request a generous gift from family. First-time homebuyers are often lucky enough to get help with their down payment assistance from caring parents and other family members who are eager to help them get into their first home. Your family members may be pleased to help you reach the milestone of owning your first home.

Learn about housing finance agencies. Special mortgage loans are provided to buyers in certain circumstances, like low income homebuyers or future homeowners looking to remodel houses in a targeted area, among others. Financing with this type of agency, you probably will be given an interest rate that is below market, down payment help and other incentives. Housing finance agencies can help eligible buyers with a lower interest rate, get you your down payment, and provide other assistance. These non-profit agencies were formed to build up community in specific places.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low and moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who may not be eligible for a conventional mortgage on their own, by providing mortgage insurance to lenders. Interest rates for an FHA mortgage are generally the going interest rate, while the down payment amounts for an FHA loan will be below those of conventional loans. The down payment can be as low as 3 percent while the closing costs can be packaged in the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has reduced closing costs, and offers a competitive rate of interest. Even though the loans don't originate from the VA, the office verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close 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%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow a portion of the seller's home equity.. You would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Typically you will pay a slightly higher interest rate on the loan financed by the seller.

No matter your strategy of pulling together down payment funds, the thrill of reaching the goal of owning 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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