Your Down Payment

Many borrowers can easily qualify for various loan programs, but they don't have much to pay a down payment. Start here

Slash the budget and build up savings. Be on the look-out for ways you can trim your expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan to automatically have a specific amount from your take-home pay transferred into savings. You would be wise to look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a vacation.

Sell things you do not need and get a part-time job. Perhaps you can find an additional job to get your down payment money. In addition, you can make an exhaustive list of items you may be able to sell. Unworn gold jewelry can be sold at local jewelers. A closetful of small items may add up to a nice sum at a garage or tag sale. You can also look into what any investments you own may bring if sold.

Borrow from your retirement plan. Investigate the parameters of your particular plan. It is possible to borrow funds from a 401(k) for a down payment or make a withdrawal from an Individual Retirement Account. Be sure to ask your plan representative about the tax consequences, repayment terms, and penalties for withdrawing early.

Ask for assistance from members of your family. First-time homebuyers are sometimes fortunate enough to get help with their down payment help from gracious family members who may be prepared to help them get into their own home. Your family members may be willing to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Provisional loan programs are provided to homebuyers in certain circumstances, like low income buyers or people looking to renovating homes in a particular part of town, among others. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other incentives. These types of agencies may help you with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit programs exist to build up the value of homes in certain areas.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low to moderate-income families get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgages. FHA assists first-time homebuyers and others who would not be eligible for a conventional mortgage on their own, by offering mortgage insurance to lenders. Interest rates with an FHA mortgage normally feature the current interest rate, while the down payment with an FHA loan will be lower than those of conventional loans. Closing costs may be included in the mortgage, while your down payment could be as low as 3% of the total amount.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which generally offers a low interest rate, no down payment, and minimal closing costs. Although the VA does not provide the loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you part of his own equity to assist you with your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a somewhat higher rate with the loan from the seller.

No matter how you gather your down payment, the thrill of living in your own home will be just as great!

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

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