Putting Together Your Down Payment

Lots of buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Start here

Tighten your belt and save. Scrutinize your budget to find extra money to go toward your down payment. There are bank programs in which some of your take-home pay is automatically transferred into savings each pay period. Some practical ways to put together funds include moving into less expensive housing, and skipping a year's vacation.

Work a second job and sell things you do not need. Look for a second job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get serious about the possessions you actually need and the items you migh be able to sell. You may own desirable items you can put up for sale at an auction website, or household items for a tag or garage sale. Also, you can think about selling any investments you own.

Borrow your down payment from your retirement plan. Investigate the parameters of your particular program. Some homebuyers get down payment money from withdrawing from Individual Retirement Accounts or taking funds out of 401(k) programs. Be sure you are clear about any penalties, the way this may affect on your taxes, and repayment obligation.

Ask for a gift from family. First-time buyers somtimes receive help with their down payment help from thoughtful family members who are able to help them get into their first home. Your family members may be inclined to help you reach the milestone of having your own home.

Research housing finance agencies. These agencies offer special loan programs for low and moderate-income buyers, buyers with an interest in renovating a home in a targeted area, and other specific kinds of buyers as specified by each agency. Financing through this type of agency, you can get an interest rate that is below market, down payment help and other perks. Housing finance agencies can assist eligible buyers with a reduced rate of interest, get you your down payment, and provide other benefits. The principal mission of non-profit housing finance agencies is to boost residence ownership in certain areas.

Find out about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income individuals get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling new homebuyers who may not be eligible for a conventional mortgage loan, to receive financing. Down payment sums for FHA mortgages are smaller than those of conventional mortgage loans, although these mortgages hold average interest rates. Closing costs can be covered by the mortgage, and your down payment can be as low as 3 percent of the total.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. Even though the VA does not actually provide the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Usually the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you part of his own equity to help you get your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Usually you'll pay a somewhat higher interest rate with the loan financed by the seller.

The feeling of accomplishment will be the same, no matter which method you use to pull together your down payment. Your brand new home will be worth it!

Want to discuss the best options for down payments? Give us a call: (727) 478-2797.

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