Your Down Payment

Lots of people who would like to buy a new home can easily qualify for a mortgage loan, but they can't afford a large down payment. Here's where to get started

Cut expenses and save. Turn your budget inside out to discover ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan to have a portion of your payroll automatically transferred into a savings account. Some practical methods to save additional funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work a second job and sell things you do not need. Perhaps you can get an additional job and build up your earnings. You can also get serious about the possessions you really need and the things you could be able to put up for sale. Maybe you have collectibles you can sell on an auction website, or household goods for a tag or garage sale. Also, you can look into selling any investments you hold.

Borrow from retirement funds. Investigate the parameters of your specific program. It is possible to pull out money from a 401(k) for a down payment or perform a withdrawal from an IRA. Be sure you understand about any penalties, the effect this will have on your income taxes, and repayment terms.

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

Research housing finance agencies. Provisional mortgage programs are extended to buyers in certain circumstances, such as low income purchasers or future homeowners looking to renovating houses in a particular area, among others. Working with this kind of agency, you can be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies can help eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit agencies to promote community in certain neighborhoods.

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

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income families get mortgage loans. Part of the U.S. 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 eligible for a typical mortgage loan on their own, by offering mortgage insurance to lenders. Down payment totals for FHA mortgages are smaller than those for typical mortgage loans, although these loans come with current rates of interest. The down payment may go as low as three percent and the closing costs could be covered by the mortgage.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a reasonable rate of interest, no down payment, and limited closing costs. Although the VA does not actually provide the mortgages, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You can fund your down payment with a second mortgage that closes with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Instead of the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you part of his home equity to help you with your down payment funds. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remainder from the seller. Typically you will pay a somewhat higher interest rate with the loan from the seller.

No matter how you gather your down payment, the thrill of living in your own home will be just as sweet!

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

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