Putting Together Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up the standard down payment. Start here

Reduce expenses and save. Look for ways you can trim your monthly expenses to save toward a down payment. There are bank programs through which some of your take-home pay is automatically deposited into savings each pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay close to home for your annual vacation.

Sell things you do not need and find a second job. Try to find an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get serious about the possessions you actually need and the things you may be able to put up for sale. A closetful of small things could add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you hold.

Tap into retirement funds. Explore the specifics of your individual plan. You can borrow money from a 401(k) plan for a down payment or perform a withdrawal from an IRA. Be sure you understand about any penalties, the effect this may have on your taxes, and repayment terms.

Ask for a generous gift from family. Many homebuyers are often lucky enough to get help with their down payment assistance from thoughtful family members who may be anxious to help get them in their first home. Your family members may be willing to help you reach the goal of buying your own home.

Research housing finance agencies. Special mortgage loans are extended to homebuyers in specific circumstances, like low income homebuyers or buyers looking to renovating homes in a particular neighborhood, among others. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment help and other perks. Housing finance agencies can assist eligible buyers with a lower interest rate, help with your down payment, and offer other benefits. These non-profit programs to boost the value of homes in particular neighborhoods.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) 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 and moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, making the buyers eligible for financing. Down payment requirements for FHA loans are smaller than those of conventional mortgages, although these loans come with current rates of interest. Closing costs can be included in the mortgage, and the down payment could be as low as 3 percent of the total.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a low fixed interest rate, no down payment, and reduced closing costs. Even though the VA doesn't actually finance the mortgage loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Most of the time, the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than needing to put together the usual 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. You would finance the majority of the purchase price with a traditional lending institution and borrow the remainder from the seller. Usually this form of second mortgage has higher interest.

No matter your strategy of putting together down payment funds, the satisfaction of owning your own home will be just as great!

Want to discuss down payment options? Call us at 504-866-5626.

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