Putting Together Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have a lot of money to put up a down payment. We have a few suggestions

Reduce expenses and save. Look for ways you can reduce your monthly expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a predetermined portion of your paycheck transferred into savings. Some effective methods to build up funds include moving into less expensive housing, and staying home for your vacation for a year or two.

Work more and sell things you don't need. Try to find a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you can sell. Multiple small things might add up to a fair amount at a garage or tag sale. You might also explore what your investments may bring if sold.

Borrow your down payment from a retirement plan. Research the specifics of your particular plan. You can borrow funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Make sure you comprehend the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for assistance from family members. First-time homebuyers somtimes receive help with their down payment help from giving family members who are prepared to help get them in their first home. Your family members may be inclined to help you reach the goal of having your first home.

Learn about housing finance agencies. These agencies extend special mortgage loans to low and moderate-income borrowers, buyers interested in rehabilitating a residence within a targeted area, and other particular types of buyers as specified by the agency. With the help of a housing finance agency, you can be given a below market interest rate, down payment help and other perks. These types of agencies may assist you with a lower rate of interest, help with your down payment, and offer other benefits. The principal goal of non-profit housing finance agencies is boosting residence ownership in certain places.

Research no-down and low-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income individuals get mortgage loans. Part 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, helping the buyers to become eligible for a home loan. Interest rates for an FHA loan generally feature the going interest rate, while the down payment with an FHA loan are smaller than those of conventional loans. The required down payment can go as low as three percent while the closing costs could be covered by the mortgage.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a low interest rate, no down payment, and minimal closing costs. Even though the mortgage loans don't originate from the VA, the department verfifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment using a second mortgage that closes along with the first. Generally the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than putting the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you a piece of his home equity to assist you with your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Often, this kind of second mortgage has higher interest.

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

Need to talk about your down payment? Call us at 504-866-5626.

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