Putting Together Your Down Payment

Lots of folks who are looking to purchase a new home qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Do you want to buy a new house, but aren't sure how to get together a down payment?

Cut expenses and save. Be on the look-out for ways you can trim your monthly expenses to put away money for a down payment. You also might enroll in an automatic savings plan at your bank to have a portion of your payroll automatically deposited into savings. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay close to home for your family vacation.

Work more and sell things you don't need. Try to find an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get creative about the items you may be able to sell. A closetful of small things could add up to a fair amount at a garage or tag sale. You can also research what your investments may bring if sold.

Tap into your retirement funds. Research the details of your individual plan. Many homebuyers get down payment money from withdrawing from their Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure you know about any penalties, the effect this will have on income taxes, and repayment obligation.

Ask for a gift from family. Many homebuyers somtimes get help with their down payment assistance from thoughtful family members who are eager to help get them in their own home. Your family members may be eager to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Special loan programs are provided to homebuyers in certain circumstances, such as low income purchasers or future homeowners looking to improve houses in a certain neighborhood, among others. Financing with this kind of agency, you probably will get an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies can assist eligible homebuyers with a lower rate of interest, help with your down payment, and provide other advantages. These non-profit programs exist to boost the value of homes in specific areas.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low and moderate-income buyers qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who might not be able to qualify for a traditional mortgage loan on their own, by offering mortgage insurance to the lenders. Down payment requirements for FHA mortgages are less than those for traditional mortgages, although these mortgages come with current rates of interest. The down payment may go as low as three percent and the closing costs can be covered by the mortgage loan.

  • VA mortgage loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which generally offers a competitive fixed rate of interest, no down payment, and minimal closing costs. Even though the VA doesn't finance the mortgages, it does issue a certificate of eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Generally the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you a piece of his home equity to help you with your down payment money. The buyer funds the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Generally, this form of second mortgage has higher interest.

No matter how you gather your down payment, the satisfaction of reaching the goal of owning your own home will be just as great!

Need to talk about the best options for down payments? Give us a call at 3032282254.

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Firelight Mortgage Consultants

Company NMLS#: 381658

7887 East Belleview Ave Ste 1100
Englewood, CO 80111