Putting Together Your Down Payment

Lots of buyers qualify for a loan, but they can't afford a large down payment. Here are a few straightforward ways to get together your down payment

Tighten your belt and save. Turn your budget upside-down to discover ways you can cut expenses to go toward your down payment. You could also try enrolling in an automatic savings plan to have a percentage of your payroll automatically moved into savings. Some practical approaches to put together funds include moving into a residence that is less expensive, and skipping your family vacation for a year or two.

Work a second job and sell things you do not need. Perhaps you can find an additional job to get your down payment money. Additionally, you can make an exhaustive inventory of items you may be able to sell. Broken gold jewelry can be sold at local jewelers. You might have desirable items you can put up for sale at an online auction, or quality household goods for a tag or garage sale. You can also look into what your investments may bring if sold.

Borrow from your retirement funds. Research the specifics of your particular plan. It is possible to borrow funds from a 401(k) plan for you down payment or withdraw from an IRA. Be sure you know about any penalties, the effect this will have on income taxes, and repayment obligation.

Request a generous gift from your family. First-time buyers are sometimes fortunate enough to receive help with their down payment help from thoughtful family members who may be able to help them get into their first home. Your family members may be inclined to help you reach the goal of buying your own home.

Learn about housing finance agencies. Special mortgate loan programs are extended to buyers in certain circumstances, like low income purchasers or people planning to remodel houses in a targeted neighborhood, among others. Working through this kind of agency, you probably will be given a below market interest rate, down payment help and other advantages. Housing finance agencies can help eligible homebuyers with a lower rate of interest, help with your down payment, and provide other assistance. The principal mission of non-profit housing finance agencies is boosting the purchase of homes in particular areas.

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

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low to moderate-income Americans qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to qualify for home financing. FHA assists first-time homebuyers and others who may not be eligible for a typical loan by themselves, by providing mortgage insurance to the lenders. Interest rates with an FHA mortgage generally feature the current interest rate, but the down payment amounts for an FHA loan will be lower than those of conventional loans. The down payment can be as low as 3 percent and the closing costs could be covered by the mortgage loan.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a reasonable interest rate, no down payment, and reduced closing costs. While the VA doesn't provide the loans, it does certify eligibility to qualify for a VA loan.

  • 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 takes care of 10 percent of the home's amount, and the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her 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. Typically, this form of second mortgage will have higher interest.

No matter how you gather your down payment, the thrill of owning your own home will be just as sweet!

Want to discuss your down payment? Call us at (727) 478-2797.

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