Your Down Payment

Lots of buyers can easily qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new home, but aren't sure how to put together your down payment?

Reduce expenses and save. Turn your budget upside-down to find ways you can cut expenses to go toward your down payment. There are bank programs in which a specific portion of your paycheck is automatically placed into a savings account every pay period. You would be wise to look into some big expenses in your spending history 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 skip a family vacation.

Work more and sell things you don't need. Try to get an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also seriously consider the possessions you actually need and the items you migh be able to put up for sale. You might have collectibles you can sell on an online auction, or quality household items for a garage or tag sale. You might also explore what any investments you hold could bring if sold.

Tap into retirement funds. Check the provisions of your retirement plan. You may borrow funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. You will need to ensure you know about any penalties, the way this will affect on taxes, and repayment terms.

Request a generous gift from family. Many homebuyers somtimes get down payment help from giving parents and other family members who are anxious to help them get into their first home. Your family members may be pleased to help you reach the goal of having your own home.

Contact housing finance agencies. Special mortgage programs are offered to homebuyers in specific circumstances, like low income purchasers or future homeowners planning to remodel houses in a certain neighborhood, among others. With the help of this kind of agency, you may be given a below market interest rate, down payment assistance and other incentives. These types of agencies can help eligible buyers with a reduced rate of interest, get you your down payment, and provide other benefits. The principal goal of not-for-profit housing finance agencies is build up residence ownership in particular parts of the city.

Learn about low-down and no-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low to moderate-income Americans get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be able to qualify for a traditional mortgage loan by themselves, by providing mortgage insurance to the private lenders. Interest rates with an FHA mortgage are generally the current interest rate, while the down payment for an FHA loan will be smaller than those of conventional loans. The down payment can go as low as 3 percent and the closing costs could be included in the mortgage.

  • VA loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a competitive fixed interest rate, no down payment, and limited closing costs. While it's true that the mortgage loans aren't actually issued by the VA, the department certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Generally the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. The borrower pays the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to loan you part of his own equity to help you get your down payment money. You would borrow the largest portion of the purchase price from a traditional lender and borrow the remaining amount from the seller. Usually you will pay a somewhat higher rate on the loan financed by the seller.

The feeling of accomplishment will be the same, no matter how you manage to put together your down payment. Your new home will be your reward!

Need to talk about the best options for down payments? Give us a call at 504-866-5626.

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