Building Your Down Payment

Lots of buyers can qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up a down payment. Do you want to buy a new home, but aren't sure how you should put together your down payment?

Slash your budget and build up savings. Be on the look-out for ways you can reduce your expenditures to set aside money for a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically deposited into a savings account every pay period. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your annual vacation.

Work more and sell items you do not need. Maybe you can find a second job to get your down payment money. You can also get creative about the items you may be able to sell. You may have collectibles you can sell on an online auction, or quality household goods for a garage or tag sale. You could also look into what any investments you hold could bring if sold.

Borrow from retirement funds. Research the details for your particular plan. Some people get down payment money from withdrawing what they need from Individual Retirement Accounts or taking money out of their 401(k) programs. Be sure you understand about any penalties, the way this may affect on your taxes, and repayment terms.

Ask for a gift from family. First-time buyers are sometimes lucky enough to receive down payment help from gracious parents and other family members who may be prepared to help get them in their own home. Your family members may be pleased to help you reach the goal of buying your own home.

Learn about housing finance agencies. These agencies provide provisional mortgage programs for moderate and low income homebuyers, buyers with an interest in rehabilitating a home in a targeted part of the city, and other groups as specified by each agency. Financing with 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 assist eligible buyers with a lower interest rate, help with your down payment, and provide other benefits. The principal goal of non-profit housing finance agencies is build up home ownership in targeted areas.

Find out about low-down and no-down mortgage loan programs.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income individuals qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in qualifying for mortgages. FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for financing. Down payment requirements for FHA loans are below those with typical mortgages, although these loans hold average interest rates. The required down payment can go as low as 3 percent and the closing costs may be financed in the mortgage loan.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan does not require a down payment, has limited closing costs, and provides a competitive rate of interest. While the mortgages aren't actually issued by the VA, the department verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you a piece of his home equity to help you get your down payment funds. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this type of second mortgage will have a higher rate of interest.

No matter how you gather your down payment, the satisfaction of owning your own home will be just as great!

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

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