Your Down Payment

Many folks who are looking to buy a new home can easily qualify for a mortgage loan, but they can't afford a large down payment. Want to look into getting a new home, but aren't sure how you should put together a down payment?

Tighten your belt and save. Be on the look-out for ways to trim your expenses to set aside money for a 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 approaches to put together funds include moving into housing that is less expensive, and skipping a year's vacation.

Sell things you do not really need and find a part-time job. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you actually need and the things you can sell. Maybe you own desirable items you can put up for sale at an auction website, or quality household items for a tag or garage sale. Also, you might want to consider selling any investments you hold.

Borrow from your retirement funds. Research the specifics of your individual plan. Many people get down payment money by withdrawing from their IRAs or borrowing from 401(k) plans. You will need to ensure you are knowledgable about any penalties, the way this will affect on your taxes, and repayment terms.

Request a generous gift from family. Many homebuyers are often lucky enough to get help with their down payment help from thoughtful family members who may be eager to help get them in their own home. Your family members may be happy at the chance to help you reach the milestone of owning your first home.

Contact housing finance agencies. These agencies offer special mortgate loan programs to moderate and low income homebuyers, buyers interested in renovating a house within a specific area, and other certain types of buyers as defined by the agency. Financing with a housing finance agency, you may be given a below market interest rate, down payment help and other incentives. These types of agencies can assist you with a lower interest rate, get you your down payment, and offer other advantages. The main goal of not-for-profit housing finance agencies is to boost residential ownership in targeted areas.

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

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income buyers qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who might not be able to qualify for a conventional mortgage loan on their own, by providing mortgage insurance to the private lenders. Down payment amounts for FHA loans are lower than those with conventional mortgage loans, although these loans hold current rates of interest. The down payment can go as low as 3 percent and the closing costs might be financed in the mortgage loan.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan requires no down payment, has limited closing costs, and provides a competitive interest rate. Even though the loans don't originate from the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment through a second mortgage that closes with the first. Generally the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you some of his home equity to help you with your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional lender and borrow the remaining amount from the seller. Often, this type of second mortgage has a higher rate of interest.

No matter your strategy of pulling together down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payment options? Give us a call at 504-866-5626.

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