Your Down Payment

Many buyers qualify for a mortgage loan, but they can't afford a large down payment. Want to look into getting a new house, but aren't sure how you should get together your down payment?

Slash the budget and build up savings. Be on the look-out for ways you can reduce your expenditures to set aside funds for a down payment. Also, you can look into bank programs through which a portion of your take-home pay is automatically transferred into savings every pay period. Some effective approaches to put together funds include moving into a residence that is less expensive, and skipping a year's vacation.

Sell items you don't need and get a second job. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you can sell. You might have desirable items you can put up for sale on an online auction, or quality household goods for a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow funds from your retirement plan. Explore the specifics for your individual plan. Some people get down payment money from withdrawing funds from their Individual Retirement Accounts or pulling money out of their 401(k) plans. Make sure you understand the tax consequences, your obligation for repayment, and possible penalties for withdrawing early.

Ask for help from generous members of your family. First-time homebuyers are sometimes lucky enough to receive help with their down payment help from caring family members who may be eager to help get them in their own home. Your family members may be willing to help you reach the goal of having your first home.

Research housing finance agencies. These agencies offer provisional loan programs for moderate and low income borrowers, buyers interested in rehabilitating a house within a particular part of the city, and additional specific kinds of buyers as defined by each finance agency. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may help you with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit programs were formed to promote the value of homes in specific neighborhoods.

Explore no-down and low-down mortgages.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get home financing. FHA helps first-time buyers and others who might not be able to qualify for a conventional loan by themselves, by providing mortgage insurance to the lenders. Down payment requirements for FHA mortgages are below those for typical mortgage loans, although these loans hold average interest rates. The required down payment can go as low as 3 percent and the closing costs may be included in the mortgage loan.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has limited closing costs, and offers a competitive interest rate. While the loans aren't actually issued by the VA, the office certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Generally the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you part of his home equity to help you with your down payment money. You would finance the largest portion of the purchase price with a traditional mortgage lending institution and borrow the remainder from the seller. Generally, this kind of second mortgage has higher interest.

No matter your method of getting together down payment money, the thrill of living in your own home will be just as great!

Need to talk about down payments? Call us at 720-598-8300.

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