Building Your Down Payment

Lots of people who are looking to purchase a new house can easily qualify for a loan, but they can't afford a large down payment. Here are a few straightforward methods that will help you get together a down payment

Tighten your belt and save. Be on the look-out for ways to reduce your expenses to put away money for a down payment. There are bank programs in which a portion of your take-home pay is automatically transferred into a savings account every pay period. Some practical methods to put together funds include moving into less expensive housing, and skipping a year's vacation.

Sell things you do not need and find a part-time job. Try to get a second job. This can be rough, but the temporary trial can provide your down payment money. In addition, you can make a comprehensive inventory of things you can sell. Unworn gold jewelry can bring a good price from local jewelry stores. Maybe you have collectibles you can sell on an auction website, or quality household items for a tag or garage sale. Also, you can look into selling any investments you own.

Borrow from retirement funds. Check the provisions of your specific program. Some homebuyers get down payment money from withdrawing from Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure to learn about the tax consequences, repayment terms, and possible penalties for withdrawing early.

Request a generous gift from family. Many buyers somtimes receive help with their down payment assistance from thoughtful parents and other 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 owning your own home.

Learn about housing finance agencies. Special mortgate loan programs are offered to homebuyers in certain situations, such as low income purchasers or homebuyers planning to renovating houses in a specific place, among others. Working through this type of agency, you probably will be given an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies may help eligible buyers with a lower interest rate, help with your down payment, and offer other assistance. The central goal of non-profit housing finance agencies is boosting the purchase of homes in specific places.

Explore no-down and low-down mortgage loans.

  • 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 assisting low to moderate-income individuals get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling homebuyers who may not be eligible for a traditional mortgage loan, to receive home financing. Interest rates for an FHA mortgage are typically the market interest rate, but the down payment amounts with an FHA loan are smaller than those of conventional loans. The required down payment can go as low as 3 percent and the closing costs can be covered by the mortgage loan.

  • VA mortgages

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a low rate of interest, no down payment, and limited closing costs. While the VA doesn't provide the mortgage loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    You can fund a down payment with a second mortgage that closes with the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, rather than needing to pull together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you part of his home equity to help you get your down payment funds. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Generally, this type of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage to put together your down payment. Your brand new home will be your reward!

Want to discuss down payments? Call us at 720-598-8300.

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