Building Your Down Payment

Lots of buyers can qualify for a mortgage loan, but they can't afford a large down payment. Do you want to look into getting a new house, but don't know how to put together a down payment?

Slash the budget and build up savings. Be on the look-out for ways you can reduce your expenses to put away money for a down payment. You could also try enrolling in an automatic savings plan to automatically have a predetermined amount from your take-home pay transferred into savings. You could 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 may move into less expensive housing, or skip a family vacation.

Work a second job and sell items you do not need. Maybe you can get a second job and build up your earnings. You can also get creative about the things you could be able to sell. Maybe you have desirable items you can sell at an auction website, or household goods for a tag or garage sale. Also, you might want to think about selling any investments you hold.

Tap into retirement funds. Research the details for your particular plan. You may borrow money from a 401(k) for a down payment or withdraw from an IRA. Be sure you know about any penalties, the effect this may have on income taxes, and repayment terms.

Request a generous gift from your family. First-time homebuyers are often fortunate enough to receive down payment assistance from thoughtful family members who are able to help get them in their own home. Your family members may be eager to help you reach the goal of buying your own home.

Contact housing finance agencies. These agencies offer special mortgage loans to low and moderate-income borrowers, buyers with an interest in remodeling a residence within a targeted part of the city, and additional specific types of buyers as defined by each agency. Financing with this kind of agency, you probably will receive an interest rate that is below market, down payment assistance and other perks. These kinds of agencies can assist you with a lower rate of interest, get you your down payment, and offer other assistance. These non-profit agencies were established to promote community in certain places.

Find out 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 a vital role in aiding low to moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to qualify for mortgages. FHA provides mortgage insurance to private lenders, enabling buyers who will not be eligible for a typical mortgage, to get a mortgage. Down payment sums for FHA loans are below those of typical mortgages, although these loans hold current rates of interest. Closing costs can be financed within the mortgage, and your down payment could be as low as 3 percent of the purchase price.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan requires no down payment, has limited closing costs, and provides the advantage of a competitive rate of interest. Although the loans aren't actually provided by the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow a portion of the seller's home equity.. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and finance the remainder with the seller. Usually this type of second mortgage will have a higher rate of interest.

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

Need to talk about down payments? Call us: (727) 478-2797.

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