Your Down Payment

Many folks who are looking to purchase a new house qualify for several different kinds of mortgages, but they don't have a lot of money to put up the standard down payment. Here are a few tips:

Cut expenses and save. Scrutinize your budget to find extra money to save for your down payment. You could also try enrolling in an automatic savings plan to automatically have a set portion of your paycheck deposited into a savings account. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your family vacation.

Sell items you don't really need and get a part-time job. Look for an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the items you may be able to put up for sale. You may have desirable items you can put up for sale on an online auction, or quality household items for a garage or tag sale. Also, you can look into selling any investments you own.

Borrow from your retirement funds. Explore the specifics of your particular plan. It is possible to borrow funds from a 401(k) for a down payment or make a withdrawal from an Individual Retirement Account. Make sure you comprehend the tax consequences, your obligation for repaying the money, and possible penalties for withdrawing early.

Request a generous gift from your family. First-time buyers are often fortunate enough to get down payment assistance from thoughtful parents and other family members who are prepared to help get them in their first home. Your family members may be pleased to help you reach the milestone of buying your own home.

Contact housing finance agencies. These types of agencies offer provisional mortgage loans for moderate and low income borrowers, buyers with an interest in renovating a house in a specific area, and other groups as specified by each agency. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other benefits. Housing finance agencies may help you with a lower interest rate, get you your down payment, and offer other assistance. The principal purpose of not-for-profit housing finance agencies is build up home ownership in targeted places.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low and moderate-income buyers get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage. Interest rates for an FHA loan are usually the current interest rate, while the down payment with an FHA mortgage are less than those of conventional loans. The down payment may be as low as three percent while the closing costs could be financed in the mortgage loan.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a reasonable fixed interest rate, no down payment, and minimal closing costs. Although the VA doesn't finance the loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Usually the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you will pay a somewhat higher interest rate with the loan from the seller.

The feeling of accomplishment will be the same, no matter how you manage to pull together your down payment. Your brand new home will be well worth it!

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

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