Your Down Payment

Lots of borrowers can qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to get together a down payment

Reduce expenses and save. Look for ways you can trim your monthly expenditures to save toward a down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into savings. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a family vacation.

Work a second job and sell things you don't need. Maybe you can get an additional job to get your down payment money. You can also get serious about the possessions you actually need and the items you can sell. A closetful of small items could add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.

Borrow from your retirement plan. Research the details of your particular plan. Many people get down payment money from withdrawing what they need from Individual Retirement Accounts or taking funds out of their 401(k) programs. Make sure to ask your plan representative about the tax ramifications, repayment terms, and early withdrawal penalties.

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

Contact housing finance agencies. Special mortgage loans are given to homebuyers in certain circumstances, such as low income buyers or buyers planning to improve houses in a specific area, among others. Working with a housing finance agency, you can receive an interest rate that is below market, down payment help and other incentives. Housing finance agencies may help eligible homebuyers with a lower interest rate, get you your down payment, and offer other advantages. These non-profit agencies to boost the value of homes in particular areas.

Explore no-down and low-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income individuals qualify for mortgages. An office of the U.S. 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 able to qualify for a traditional mortgage on their own, by offering mortgage insurance to the lenders. Down payment totals for FHA mortgages are smaller than those for traditional mortgages, although these mortgages have average rates of interest. Closing costs can be financed within the mortgage, and the down payment might be as low as 3% of the total amount.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. Even though the VA does not actually issue the mortgage loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You may finance your down payment with a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. You would borrow the majority of the purchase price from a traditional mortgage lender and borrow the remaining amount from the seller. Typically you will pay a somewhat higher interest rate on the loan from the seller.

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

Need to talk about down payment options? Call us: (303) 228-2254.

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