Your Down Payment

Many borrowers qualify for a loan, but they can't afford a large down payment. Here are a few methods that will help you get together a down payment

Reduce expenses and save. Be on the look-out for ways you can trim your expenditures to set aside funds for a down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a specific portion of your paycheck deposited into savings. Some effective approaches to build up funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work a second job and sell items you do not need. Try to get a second job. This can be rough, but the temporary trial can help you get your down payment. You can also seriously consider the possessions you really need and the things you can sell. A closetful of small things may add up to a nice sum at a garage or tag sale. Also, you can consider selling any investments you own.

Borrow funds from a retirement plan. Explore the details of your particular plan. You may borrow funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Be sure you understand about any penalties, the effect this will have on income taxes, and repayment terms.

Ask for a generous gift from family. Many homebuyers are often fortunate enough to receive help with their down payment assistance from giving parents and other family members who may be able to help get them in their own home. Your family members may be inclined to help you reach the goal of owning your own home.

Learn about housing finance agencies. These agencies extend provisional mortgage programs to low and moderate-income homebuyers, buyers with an interest in sprucing up a home within a particular area, and additional groups as defined by the agency. With the help of this kind of agency, you may receive an interest rate that is below market, down payment help and other advantages. Housing finance agencies may assist eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other assistance. The main goal of non-profit housing finance agencies is promoting residential ownership in certain parts of the city.

Learn about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income families get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, making the buyers eligible for a home loan. Down payment amounts for FHA mortgages are below those with typical mortgage loans, although these mortgages come with current rates of interest. Closing costs can be covered by the mortgage, and your down payment might be as low as 3 percent of the total amount.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and provides the advantage of a competitive interest rate. Even though the mortgages are not actually provided by the VA, the office certifies borrowers by issuing eligibility certificates.

  • 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 cost of the home and the "piggyback" is for 10%. In contrast to the traditional 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 agrees to loan you some of his home equity to help you with your down payment money. The buyer finances the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher interest rate with the loan from the seller.

No matter your method of getting together your down payment, the satisfaction of owning your own home will be just as great!

Want to discuss down payment options? Call us: (720) 550-4235.

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