Building Your Down Payment

Many buyers qualify for a loan, but they don't have a lot of cash to put up the standard down payment. We have a few ideas

Slash your budget and build up savings. Be on the look-out for ways you can trim your monthly expenses to set aside money for a down payment. There are bank programs through which some of your take-home pay is automatically placed into a savings account each pay period. Some effective methods to save additional funds include moving into housing that is less expensive, and staying home for your family vacation for a year or two.

Sell things you do not need and get a second job. Perhaps you can find a second job to get your down payment money. You can also get creative about the items you could be able to sell. Multiple small things may add up to a nice sum at a garage or tag sale. You can also look into what any investments you hold may sell for.

Borrow from retirement funds. Investigate the provisions of your retirement plan. You can borrow money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Make sure you understand the tax ramifications, repayment terms, and early withdrawal penalties.

Ask for a generous gift from your family. Many homebuyers are sometimes fortunate enough to get down payment help from caring family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Special mortgage loans are extended to homebuyers in specific circumstances, such as low income purchasers or homebuyers looking to improve houses in a particular place, among others. Working with this type of agency, you probably will get an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may help you with a lower rate of interest, help with your down payment, and provide other benefits. The central purpose of non-profit housing finance agencies is build up residence ownership in particular places.

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

  • FHA mortgages

    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 aiding low and moderate-income families get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling buyers who may not be eligible for a typical loan, to receive financing. Down payment sums for FHA loans are lower than those with conventional mortgages, even though these mortgages hold current rates of interest. The down payment may be as low as three percent and the closing costs might be included in the mortgage.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a competitive fixed interest rate, no down payment, and limited closing costs. Even though the VA does not actually provide the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You can fund your down payment through a second mortgage that closes along with the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to lend you part of his home equity to help you get your down payment money. You would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Usually you'll pay a somewhat higher interest rate with the loan financed by the seller.

The satisfaction will be the same, no matter which approach you use to come up with the down payment. Your new home will be your reward!

Need to talk about down payment options? Give us a call: 504-866-5626.

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