Your Down Payment

Many borrowers can easily qualify for several different kinds of mortgages, but they don't have a lot of cash to put up the standard down payment. Do you want to buy a new home, but aren't sure how to put together your down payment?

Reduce expenses and save. Look for ways to trim your expenditures to save toward a down payment. You might also try enrolling in an automatic savings plan to automatically have a set amount from your take-home pay moved into savings. 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 move into less expensive housing, or stay local for your family vacation.

Sell things you do not need and find a part-time job. Perhaps you can get a second job and build up your earnings. Additionally, you can put together an exhaustive list of items you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelry stores. Maybe you own collectibles you can put up for sale at an online auction, or quality household goods for a tag or garage sale. Also, you might want to consider selling any investments you own.

Tap into retirement funds. Check the provisions of your particular plan. Some people get down payment money from withdrawing funds from Individual Retirement Accounts or borrowing from 401(k) programs. Make sure you understand the tax consequences, repayment terms, and possible penalties for withdrawing early.

Ask for a gift from family. Many homebuyers are sometimes lucky enough to get down payment help from caring parents and other family members who may be prepared to help them get into their own home. Your family members may be pleased to help you reach the milestone of having your own home.

Contact housing finance agencies. These agencies offer provisional mortgate loan programs to moderate and low income homebuyers, buyers interested in sprucing up a residence within a specific area, and additional groups as specified by the agency. Financing through this kind of agency, you probably will be given an interest rate that is below market, down payment help and other benefits. These kinds of agencies can help you with a lower interest rate, get you your down payment, and provide other advantages. The primary mission of not-for-profit housing finance agencies is promoting the purchase of homes in certain places.

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

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting home financing. FHA provides mortgage insurance to private lenders, helping the buyers to become eligible for a loan. Interest rates for an FHA loan are usually the market interest rate, while the down payment with an FHA mortgage are lower than those of conventional loans. The down payment can be as low as 3 percent while the closing costs might be covered by the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. While the VA doesn't actually issue the mortgages, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You may finance your down payment using a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you some of his own equity to help you with your down payment money. You would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Usually this kind of second mortgage will have a higher rate of interest.

The feeling of accomplishment will be the same, no matter which strategy you use to come up with your down payment. Your new home will be worth it!

Want to discuss your down payment? Call us at 504-866-5626.

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