Building Your Down Payment

Lots of buyers qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few straightforward methods that will help you put together your down payment

Reduce expenses and save. Scrutinize your budget to discover extra money to save for your down payment. There are bank programs through which a specific portion of your take-home pay is automatically placed into savings each pay period. Some practical ways to put together funds include moving into less expensive housing, and skipping your vacation for a year or two.

Work a second job and sell items you don't need. Maybe you can find an additional job and build up your earnings. You can also seriously consider the possessions you actually need and the things you migh be able to sell. Multiple small things can add up to a fair amount at a garage or tag sale. You can also research what any investments you have could bring if sold.

Borrow your down payment from a retirement plan. Check the parameters of your specific program. Some people get down payment money by withdrawing from IRAs or taking money out of 401(k) plans. Make sure you understand the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for a gift from family. Many buyers somtimes get down payment help from thoughtful parents and other family members who may be eager to help them get into their first home. Your family members may be pleased to help you reach the milestone of buying your first home.

Contact housing finance agencies. Special mortgage programs are offered to homebuyers in certain circumstances, like low income buyers or future homeowners planning to renovating houses in a particular part of town, among others. With the help of this type of agency, you can receive a below market interest rate, down payment assistance and other benefits. Housing finance agencies may help eligible buyers with a reduced interest rate, help with your down payment, and provide other assistance. The principal purpose of non-profit housing finance agencies is to promote the purchase of homes in particular areas.

Learn about low-down and no-down mortgage loan programs.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get mortgages. FHA helps first-time buyers and others who would not be eligible for a traditional mortgage by themselves, by providing mortgage insurance to lenders. Down payment totals for FHA mortgages are less than those for conventional mortgages, although these mortgages have current rates of interest. Closing costs can be financed within the mortgage, and your down payment could be as low as 3 percent of the purchase price.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a reasonable fixed interest rate, no down payment, and minimal closing costs. Although the VA does not provide the mortgage loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Usually the piggyback loan is for 10 percent of the purchase price, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of needing to put together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you some of his home equity to help you get your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional lender and borrow the remainder from the seller. Typically you'll pay a slightly higher rate with the loan financed by the seller.

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

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

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