Your Down Payment
Lots of folks who would like to purchase a new house can easily qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new home, but don't know how you should put together a down payment?
Slash your budget and build up savings. Look for ways to reduce your expenditures to put away money for a down payment. You could also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into savings. Some practical ways to build up funds include moving into housing that is less expensive, and staying local for your vacation this year.
Work a second job and sell items you don't need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can put together a comprehensive list of things you can sell. Unworn gold jewelry can bring a good amount from local jewelers. You might own desirable items you can put up for sale at an online auction, or household items for a tag or garage sale. Also, you might want to consider selling any investments you own.
Tap into retirement funds. Investigate the parameters of your specific program. Many people get down payment money by withdrawing what they need from IRAs or getting funds out of 401(k) programs. You will need to be sure you are knowledgable about any penalties, the effect this will have on your taxes, and repayment terms.
Ask for assistance from generous members of your family. Many buyers are often lucky enough to receive down payment assistance from thoughtful parents and other family members who are prepared to help them get into their first home. Your family members may be pleased at the chance to help you reach the milestone of owning your first home.
Research housing finance agencies. Provisional loan programs are given to homebuyers in certain situations, like low income buyers or homebuyers planning to renovating homes in a specific area, among others. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can assist eligible buyers with a reduced interest rate, get you your down payment, and provide other advantages. The primary purpose of non-profit housing finance agencies is promoting the purchase of homes in targeted places.
Find out about low-down and no-down mortgage loan programs.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for mortgages.
FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a home loan.
Interest rates for an FHA loan are generally the going interest rate, while the down payment requirements for an FHA loan will be below those of conventional loans. The required down payment can go as low as 3 percent and the closing costs might be included in the mortgage.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA loan, which usually offers a reasonable rate of interest, no down payment, and minimal closing costs. While it's true that the mortgage loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to lend you a portion of his home equity to assist you with your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lender and borrow the remaining amount from the seller. Often, this type of second mortgage will have a higher rate of interest.
No matter how you gather your down payment, the satisfaction of living in your own home will be just as great!
Need to talk about your down payment? Call us at (303) 228-2254.