Building Your Down Payment

Lots of borrowers qualify for a mortgage loan, but they don't have much to put up the standard down payment. Do you want to buy a new home, but don't know how to put together a down payment?

Reduce expenses and save. Look for ways you can trim your monthly expenses to put away money for a down payment. You also could enroll in an automatic savings plan to have a percentage of your payroll automatically transferred into savings. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.

Sell items you don't really need and get a part-time job. Perhaps you can find an additional job and save your earnings. In addition, you can make a comprehensive inventory of items you can sell. Broken gold jewelry can be sold at local jewelry stores. You might own desirable items you can put up for sale at an auction website, or household goods for a garage or tag sale. You can also look into what any investments you hold could bring if sold.

Borrow funds from a retirement plan. Explore the details for your individual plan. It is possible to borrow funds from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure you know about any penalties, the effect this will have on your taxes, and repayment obligation.

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

Contact housing finance agencies. Special loan programs are offered to homebuyers in specific situations, like low income buyers or future homeowners planning to remodel homes in a particular area, among others. With the help of a housing finance agency, you can get an interest rate that is below market, down payment assistance and other perks. Housing finance agencies can assist eligible buyers with a reduced interest rate, help with your down payment, and offer other assistance. The primary purpose of not-for-profit housing finance agencies is boosting residence ownership in certain parts of the city.

Research no-down and low-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgage loans. FHA aids first-time buyers and others who may not be able to qualify for a traditional loan on their own, by offering mortgage insurance to the private lenders. Interest rates for an FHA mortgage normally feature the going interest rate, but the down payment with an FHA mortgage are smaller than those of conventional loans. Closing costs may be financed within the mortgage, while the down payment can be as low as 3 percent of the total amount.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and provides a competitive rate of interest. While the VA doesn't actually finance the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You may finance a down payment through a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than putting the usual 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a slightly higher interest rate with the loan financed by the seller.

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

Want to discuss your down payment? Give us a call: 561-475-2281.