Putting Together Your Down Payment

Lots of folks who are looking to buy a new home can qualify for several different kinds of mortgages, but they don't have a large sum of cash to pay the standard down payment. Below are a few ways to put together your down payment

Cut expenses and save. Turn your budget inside out to discover extra money to go toward your down payment. You might also try enrolling in an automatic savings plan at your bank to have a percentage of your payroll automatically deposited into your savings account. Some effective ways to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Work more and sell items you don't need. Try to find a second job. This can be rough, but the temporary trial can help you get your down payment. You can also seriously consider the possessions you actually need and the things you can sell. Multiple small things can add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow your down payment from a retirement plan. Check the parameters of your specific plan. It is possible to take out money from a 401(k) for you down payment or get a withdrawal from an Individual Retirement Account. You will need to ensure you are knowledgable about any penalties, the way this will affect on your taxes, and repayment obligation.

Request a generous gift from family. First-time homebuyers are sometimes lucky enough to receive down payment help from gracious family members who are willing to help them get into their first home. Your family members may be willing to help you reach the milestone of owning your first home.

Learn about housing finance agencies. Special loan programs are extended to homebuyers in certain circumstances, such as low income buyers or homebuyers looking to improve homes in a particular place, among others. Financing through this kind of agency, you can receive an interest rate that is below market, down payment help and other perks. Housing finance agencies can help eligible homebuyers with a lower rate of interest, help with your down payment, and provide other assistance. These non-profit agencies exist to promote home ownership in specific places.

Research no-down and low-down mortgage loan programs.

  • Federal Housing Administration (FHA) 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 and moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling homebuyers who might not qualify for a conventional loan, to obtain a mortgage. Down payment amounts for FHA mortgages are less than those with traditional mortgages, although these loans hold current interest rates. Closing costs can be covered by the mortgage, and the down payment may be as low as 3 percent of the purchase price.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. Even though the VA doesn't actually issue the loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    You can finance a down payment with a second mortgage that closes along with the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, 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 remaining funds from the seller. Often, this kind of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter how you manage to come up with your down payment. Your new home will be well worth it!

Need to talk about the best options for down payments? Give us a call at 720-598-8300.

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