Building Your Down Payment

Lots of borrowers qualify for a loan, but they don't have a lot of money to pay a down payment. Below are a few methods that will help you put together your down payment

Tighten your belt and save. Be on the look-out for ways to trim your monthly expenditures to set aside money for a down payment. There are bank programs through which some of your take-home pay is automatically deposited into a savings account every pay period. Some effective ways to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Sell things you do not really need and find a second job. Look for an additional job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can make a comprehensive inventory of items you may be able to sell. Unused gold jewelry can bring a good amount from local jewelers. You may have desirable items you can sell on an online auction, or quality household items for a tag or garage sale. You might also explore what any investments you have may bring if sold.

Borrow funds from a retirement plan. Research the specifics for your particular plan. Some people get down payment money from withdrawing what they need from IRAs or borrowing from 401(k) plans. Make sure you are knowledgable about any penalties, the effect this may have on your taxes, and repayment terms.

Ask for a gift from your family. First-time homebuyers are often lucky enough to receive down payment assistance from caring parents and other family members who are able to help them get into their own home. Your family members may be eager to help you reach the milestone of having your own home.

Research housing finance agencies. These types of agencies provide special mortgate loan programs to low and moderate-income homebuyers, buyers interested in renovating a residence within a particular part of the city, and other certain kinds of buyers as specified by each finance agency. With the help of this type of agency, you probably will get an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may assist you with a reduced interest rate, help with your down payment, and offer other advantages. The primary mission of non-profit housing finance agencies is to boost residential ownership in specific areas.

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

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgages. FHA aids first-time buyers and others who might not be able to qualify for a conventional mortgage loan on their own, by providing mortgage insurance to private lenders. Down payment sums for FHA mortgages are smaller than those with typical mortgage loans, even though these loans have average interest rates. Closing costs may be financed within the mortgage, and the down payment might be as low as 3% of the total.

  • VA mortgage loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which generally offers a low fixed rate of interest, no down payment, and limited closing costs. While the mortgages don't originate from the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a portion of his own equity to assist you with your down payment money. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually this type of second mortgage will have higher interest.

No matter how you gather down payment funds, the satisfaction of owning your own home will be just as great!

Need to talk about your down payment? Give us a call at 720-598-8300.

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