Building Your Down Payment

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Many buyers can easily 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

Tighten your belt and save. Be on the look-out for ways to trim your monthly expenses to save toward a down payment. You could also decide to enroll in an automatic savings plan to automatically have a set amount from your take-home pay moved into a savings account. You would be wise to 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 skip a vacation.

Work a second job and sell items you do not need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can put together a comprehensive list of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. Multiple small items might add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow from a retirement plan. Research the specifics for your individual plan. Many homebuyers get down payment money from withdrawing what they need from Individual Retirement Accounts or borrowing from their 401(k) programs. Be sure you know about any penalties, the way this will affect on your income taxes, and repayment terms.

Ask for assistance from family members. Many buyers sometimes get help with their down payment help from caring parents and other family members who may be willing to help them get into their first home. Your family members may be willing to help you reach the goal of having your first home.

Learn about housing finance agencies. These agencies provide provisional mortgage loans to low and moderate-income homebuyers, buyers with an interest in sprucing up a residence within a particular area, and other particular kinds of buyers as specified by the finance agency. With the help of a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies can assist eligible homebuyers with a lower interest rate, help with your down payment, and offer other advantages. The primary goal of not-for-profit housing finance agencies is to promote home ownership in particular areas.

Learn about low-down and no-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income buyers qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who may not be eligible for a typical loan by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA loan are usually the going interest rate, while the down payment for an FHA mortgage will be less than those of conventional loans. The down payment can be as low as 3 percent while the closing costs may be financed in the mortgage.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterans and service people. This particular loan does not require a down payment, has reduced closing costs, and provides a competitive interest rate. While it's true that the mortgages are not actually provided by the VA, the department verifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and borrow the remainder from the seller. Typically, this kind of second mortgage has a higher rate of interest.

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

Want to discuss down payment options? Call us: (512) 472-1095.