Your Down Payment

Many people who would like to buy a new home qualify for a mortgage loan, but they don't have a lot of money to pay the standard down payment. Here's where to get started

Cut expenses and save. Turn your budget upside-down to find ways you can cut expenses to save for your down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your payroll automatically moved into a savings account. You might look into some big expenses in your budget that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay local for your vacation.

Sell items you do not really need and find a second job. Perhaps you can get a second job and build up your earnings. You can also get creative about the items you can sell. Maybe you own collectibles you can put up for sale at an online auction, or household items for a tag or garage sale. Also, you can consider selling any investments you hold.

Borrow from retirement funds. Research the details of your individual plan. It is possible to pull out funds from a 401(k) for a down payment or withdraw from an IRA. Make sure to ask your plan representative about the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for assistance from members of your family. First-time buyers are sometimes lucky enough to get help with their down payment help from gracious family members who may be prepared to help get them in their first home. Your family members may be happy at the chance to help you reach the goal of having your own home.

Research housing finance agencies. Special loan programs are extended to buyers in certain situations, like low income buyers or homebuyers looking to renovating homes in a specific part of town, among others. With the help of this type of agency, you may be given a below market interest rate, down payment assistance and other advantages. Housing finance agencies may assist you with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit programs to boost home ownership in certain neighborhoods.

Learn 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 role in assisting low to moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be eligible for a typical loan on their own, by offering mortgage insurance to private lenders. Interest rates with an FHA mortgage usually feature the current interest rate, while the down payment with an FHA loan will be lower than those of conventional loans. Closing costs may be covered by the mortgage, and your down payment can be as low as 3 percent of the total amount.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a low interest rate, no down payment, and reduced closing costs. While it's true that the loans don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment with a second mortgage that closes along with the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of having to pull together the usual 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lender and borrow the remaining amount from the seller. Usually this type of second mortgage will have a higher rate of interest.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your new home will be your reward!

Need to talk about the best options for down payments? Call us: 972.798.2110.