Putting Together Your Down Payment

Lots of buyers qualify for a mortgage loan, but they can't afford a large down payment. Want to look into getting a new home, but don't know how to put together a down payment?

Tighten your belt and save. Turn your budget upside-down to uncover ways you can cut expenses to save for your down payment. You also could enroll in an automatic savings plan at your bank to have a percentage of your pay automatically deposited into a savings account. Some effective strategies to put together funds include moving into less expensive housing, and skipping your vacation for a year or two.

Sell items you don't really need and find a second job. Try to find a second job. This can be exhausting, but the temporary trial can provide your down payment money. You can also get creative about the things you could be able to sell. Multiple small items may add up to a nice sum at a garage or tag sale. You can also research what any investments you own could bring if sold.

Borrow from your retirement funds. Investigate the provisions of your specific plan. You may take out funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Make sure you know about any penalties, the way this could affect on your income taxes, and repayment terms.

Ask for a generous gift from your family. Many buyers are often fortunate enough to receive 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 inclined to help you reach the milestone of having your first home.

Learn about housing finance agencies. These agencies offer provisional loan programs for low and moderate-income buyers, buyers with an interest in remodeling a home in a particular part of the city, and additional groups as specified by each finance agency. With the help of this kind of agency, you probably will get a below market interest rate, down payment assistance and other advantages. Housing finance agencies may help you with a lower interest rate, help with your down payment, and provide other benefits. These non-profit agencies to promote the value of homes in particular areas.

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

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low and moderate-income Americans qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who would not be eligible for a typical mortgage loan by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA mortgage are generally the market interest rate, but the down payment for an FHA mortgage are below those of conventional loans. The required down payment may be as low as 3 percent while the closing costs could be financed in the mortgage loan.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has reduced closing costs, and provides the benefit of a competitive rate of interest. Although the VA does not issue the mortgages, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a portion of his own equity to help you get your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lender and finance the remainder with the seller. Typically you will pay a slightly higher interest rate on the loan from the seller.

The satisfaction will be the same, no matter which approach you use to come up with the down payment. Your new home will be well worth it!

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

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