Building Your Down Payment

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Many folks who are looking to buy a new home can qualify for a mortgage loan, but they don't have a lot of money to put up the standard down payment. Below are a few methods that will help you put together your down payment

Reduce expenses and save. Be on the look-out for ways you can reduce your expenditures to save toward a down payment. There are bank programs in which some of your paycheck is automatically transferred into savings each pay period. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or stay local for your vacation.

Sell items you don't need and find a part-time job. Perhaps you can find a second job to get your down payment money. You can also seriously consider the possessions you actually need and the things you can put up for sale. A closet full of small things can add up to a fair amount at a garage or tag sale. Also, you can consider selling any investments you hold.

Tap into your retirement funds. Check the parameters of your retirement program. You may take out funds from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. Make sure you understand the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Request a generous gift from your family. Many homebuyers are sometimes fortunate enough to receive help with their down payment assistance from gracious parents and other family members who may be eager to help them get into their own home. Your family members may be willing to help you reach the milestone of having your own home.

Research housing finance agencies. Provisional mortgage programs are extended to buyers in certain circumstances, like low income purchasers or people looking to remodel homes in a targeted neighborhood, among others. With the help of this kind of agency, you can be given a below market interest rate, down payment help and other advantages. These kinds of agencies can assist you with a lower interest rate, help with your down payment, and offer other advantages. The primary mission of not-for-profit housing finance agencies is to boost residence ownership in specific places.

Research no-down and low-down mortgage loan programs.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low and moderate-income individuals get mortgages. Part 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 would not be eligible for a conventional mortgage by themselves, by providing mortgage insurance to the lenders. Down payment amounts for FHA loans are lower than those with traditional mortgage loans, although these mortgages come with average interest rates. The required down payment can be as low as 3 percent and the closing costs might be packaged in the mortgage.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterans and service people. This special loan requires no down payment, has minimal closing costs, and provides the benefit of a competitive rate of interest. While the mortgages don't originate from the VA, the department verifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a piece of his home equity to help you get your down payment money. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a slightly higher rate on the loan financed by the seller.

The feeling of accomplishment will be the same, no matter which method you use to come up with the down payment. Your brand new home will be your reward!

Want to discuss down payment options? Give us a call: 863-286-4824.

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