Putting Together Your Down Payment

Lots of folks who are looking to purchase a new home qualify for various loan programs, but they don't have much to pay the standard down payment. We have a few ideas

Tighten your belt and save. Look for ways to trim your monthly expenses to save toward a down payment. There are bank programs through which some of your paycheck is automatically transferred into savings every pay period. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your family vacation.

Sell things you don't need and get a part-time job. Perhaps you can find an additional job to get your down payment money. In addition, you can make a comprehensive list of things you can sell. Broken gold jewelry can be sold at local jewelry stores. You might have desirable items you can sell at an online auction, or household items for a garage or tag sale. Also, you can think about selling any investments you hold.

Borrow from your retirement funds. Check the provisions of your specific program. Many people get down payment money from withdrawing from IRAs or borrowing from 401(k) plans. Make sure you are knowledgable about any penalties, the effect this will have on your taxes, and repayment obligation.

Request a gift from family. First-time buyers somtimes get down payment assistance from caring parents and other family members who may be willing to help them get into their own home. Your family members may be pleased to help you reach the goal of having your first home.

Learn about housing finance agencies. Special mortgage programs are extended to buyers in certain situations, such as low income buyers or future homeowners planning to improve houses in a specific place, among others. With the help of this kind of agency, you probably will be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can help you with a lower interest rate, help with your down payment, and offer other advantages. These non-profit agencies to promote community in certain areas.

Find out about low-down and no-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low and moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgages. FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Down payment sums for FHA mortgages are below those of conventional mortgages, although these loans come with average rates of interest. The required down payment can be as low as 3 percent while the closing costs can be included in the mortgage loan.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. While the VA does not actually finance the loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You can fund a down payment with a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    We a seller carries back a second mortgage, the seller loans you part of his or her equity. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remaining amount from the seller. Typically you'll pay a somewhat higher rate with the loan from the seller.

The feeling of accomplishment will be the same, no matter which method you use to pull together your down payment. Your new home will be worth it!

Need to talk about down payment options? Call us at 504-866-5626.

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