Your Down Payment

Lots of buyers can easily qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new home, but aren't sure how you should get together your down payment?

Tighten your belt and save. Look for ways to trim 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 have a portion of your pay automatically moved into savings. Some effective methods to build up funds include moving into housing that is less expensive, and skipping your vacation for a year or two.

Work a second job and sell things you do not need. Perhaps you can find an additional job and save your earnings. You can also get serious about the possessions you actually need and the items you migh be able to put up for sale. You might have collectibles you can put up for sale on an auction website, or household goods for a tag or garage sale. Also, you can consider selling any investments you own.

Borrow from retirement funds. Check the parameters of your retirement plan. You can take out funds from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. Make sure you understand about any penalties, the way this may affect on income taxes, and repayment obligation.

Ask for help from members of your family. Many homebuyers are sometimes fortunate enough to receive down payment help from giving parents and other family members who may be prepared to help them get into their own home. Your family members may be pleased to help you reach the milestone of having your own home.

Learn about housing finance agencies. Special mortgate loan programs are given to buyers in specific situations, such as low income buyers or people looking to renovating homes in a specific part of town, among others. Financing with this type of agency, you can get an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies can help you with a lower rate of interest, help with your down payment, and offer other assistance. These non-profit programs exist to build up community in specific neighborhoods.

Learn about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) 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 helping low and moderate-income individuals qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling buyers who will not be eligible for a traditional mortgage loan, to receive a mortgage. Interest rates with an FHA mortgage generally feature the current interest rate, but the down payment with an FHA loan will be less than those of conventional loans. Closing costs may be included in the mortgage, and the down payment can be as low as 3% of the total.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a low fixed rate of interest, no down payment, and limited closing costs. While the VA does not actually finance the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Usually the piggyback loan takes care of 10 percent of the home's price, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to lend you some of his own equity to assist you with your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Typically, this form of second mortgage has a higher rate of interest.

No matter how you gather down payment funds, the satisfaction of living in your own home will be just as sweet!

Want to discuss down payments? Give us a call at 405-513-7700.

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