Building Your Down Payment

Lots of folks who are looking to purchase a new home can qualify for various loan programs, but they don't have much to pay a down payment. We have a few ideas

Tighten your belt and save. Scrutinize the budget to discover ways you can cut expenses to go toward your down payment. You could also try enrolling in an automatic savings plan to automatically have a predetermined amount from your take-home pay deposited 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. For example, you might decide to move into less expensive housing, or stay close to home for your annual vacation.

Work a second job and sell items you do not need. Maybe you can get an additional job and build up your earnings. Additionally, you can put together a comprehensive list of things you may be able to sell. Broken gold jewelry can be sold at local jewelry stores. You may own desirable items you can sell on an online auction, or quality household items for a garage or tag sale. Also, you can look into selling any investments you own.

Borrow money from a retirement plan. Check the parameters of your retirement plan. It is possible to pull out money from a 401(k) plan for a down payment or make a withdrawal from an IRA. Make sure you understand about any penalties, the effect this could have on your taxes, and repayment obligation.

Ask for assistance from generous members of your family. First-time homebuyers are often lucky enough to get help with their down payment assistance from thoughtful family members who are anxious to help them get into their own home. Your family members may be pleased to help you reach the goal of having your own home.

Research housing finance agencies. Special loan programs are given to buyers in certain circumstances, like low income homebuyers or buyers looking to renovating houses in a particular neighborhood, among others. With the help of this type of agency, you can receive an interest rate that is below market, down payment assistance and other perks. These types of agencies may help eligible buyers with a lower interest rate, help with your down payment, and offer other advantages. These non-profit agencies exist to build up the value of homes in particular neighborhoods.

Explore no-down and low-down mortgages.

  • 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 aiding low and moderate-income Americans get mortgage loans. Part of the United States 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 will not be eligible for a conventional mortgage, to get a mortgage. Down payment amounts for FHA loans are lower than those of conventional mortgages, even though these mortgages come with average interest rates. The required down payment can go as low as three percent and the closing costs might be packaged in the mortgage loan.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. While the loans don't originate from the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you some of his home equity to help you with your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Often, this form of second mortgage has a higher rate of interest.

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

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

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