Your Down Payment

Many people who would like to buy a new house qualify for various loan programs, but they can't afford a large down payment. Here are a few straightforward ways to put together your down payment

Tighten your belt and save. Scrutinize the budget to uncover ways you can cut expenses to save for your down payment. There are bank programs through which a specific portion of your take-home pay is automatically transferred into a savings account every pay period. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a family vacation.

Sell things you don't need and find a part-time job. Maybe you can get an additional job to get your down payment money. You can also seriously consider the possessions you actually need and the things you can put up for sale. Maybe you have collectibles you can put up for sale on an auction website, or quality household items for a tag or garage sale. Also, you might want to consider selling any investments you own.

Borrow from your retirement funds. Check the provisions of your specific plan. You can borrow funds from a 401(k) for you down payment or get a withdrawal from an Individual Retirement Account. Make sure you understand about any penalties, the effect this may have on your taxes, and repayment obligation.

Ask for help from family members. Many buyers are sometimes fortunate enough to get down payment assistance from giving family members who may be eager to help them get into their own home. Your family members may be inclined to help you reach the milestone of having your own home.

Learn about housing finance agencies. Special mortgate loan programs are extended to buyers in specific circumstances, such as low income homebuyers or people planning to remodel houses in a specific area, among others. With the help of a housing finance agency, you probably will get an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies can help you with a lower interest rate, help with your down payment, and offer other advantages. The central purpose of non-profit housing finance agencies is promoting residence ownership in targeted parts of the city.

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

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income Americans qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling new homebuyers who will not qualify for a conventional loan, to obtain a mortgage. Interest rates with an FHA loan are normally the going interest rate, but the down payment for an FHA mortgage will be smaller than those of conventional loans. Closing costs can be covered by the mortgage, and the down payment could be as low as 3% of the total amount.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. Although the VA doesn't provide the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can fund a down payment using a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. The borrower pays the remaining 10%, instead of putting the usual 20% down payment.

  • Carry-Back loans

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

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

Want to discuss down payments? Give us a call: 504-866-5626.

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