Building Your Down Payment

Lots of buyers can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few ideas:

Slash the budget and build up savings. Be on the look-out for ways you can trim your monthly expenses to put away money for a down payment. Also, you can look into bank programs through which some of your paycheck is automatically transferred into savings every pay period. You might look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Work more and sell items you don't need. Perhaps you can find an additional job and build up your earnings. You can also get serious about the possessions you actually need and the things you may be able to sell. Multiple small things might add up to a fair amount at a garage or tag sale. You can also look into what your investments could bring if sold.

Borrow money from a retirement plan. Explore the details of your individual plan. It is possible to take out money from a 401(k) for you down payment or perform a withdrawal from an IRA. Be sure to ask your plan representative about the tax ramifications, repayment terms, and any early withdrawal penalties.

Request a gift from family. Many homebuyers somtimes receive help with their down payment help from giving family members who are prepared to help get them in their own home. Your family members may be inclined to help you reach the milestone of buying your first home.

Research housing finance agencies. These types of agencies provide special mortgate loan programs to moderate and low income buyers, buyers with an interest in rehabilitating a residence in a targeted area, and other certain kinds of buyers as defined by each agency. Working with this type of agency, you can be given a below market interest rate, down payment help and other benefits. These kinds of agencies can assist you with a lower rate of interest, get you your down payment, and provide other benefits. The principal goal of non-profit housing finance agencies is to promote the purchase of homes in particular places.

Learn about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting home financing. FHA assists first-time buyers and others who would not be able to qualify for a traditional mortgage by themselves, by offering mortgage insurance to lenders. Down payment amounts for FHA loans are smaller than those for conventional mortgages, even though these loans hold current interest rates. The down payment can go as low as three percent while the closing costs might be included in the mortgage loan.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a low fixed rate of interest, no down payment, and limited closing costs. While the mortgages are not actually provided by the VA, the office verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the purchase price, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    We a seller carries back a second 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 remainder from the seller. Typically you'll pay a slightly higher interest rate on the loan from the seller.

The feeling of accomplishment will be the same, no matter which approach you use to pull together your down payment. Your new home will be worth it!

Need to talk about down payment options? Call us: (720) 550-4235.

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