Your Down Payment

Lots of borrowers can qualify for various loan programs, but they can't afford a large down payment. Here are a few straightforward ways to get together a down payment

Tighten your belt and save. Look for ways to trim your monthly expenses to set aside funds for a down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your payroll automatically deposited into savings. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your annual vacation.

Sell items you do not need and find a second job. Try to get an additional job. This can be rough, but the temporary trial can provide your down payment money. You can also seriously consider the possessions you actually need and the items you can put up for sale. Multiple small things may add up to a fair amount at a garage or tag sale. You might also look into what your investments could sell for.

Borrow from retirement funds. Explore the specifics of your particular plan. Many people get down payment money from withdrawing funds from Individual Retirement Accounts or getting money out of their 401(k) plans. You will need to ensure you are knowledgable about any penalties, the effect this may have on your taxes, and repayment terms.

Ask for a gift from family. First-time homebuyers somtimes get down payment assistance from thoughtful family members who may be willing to help get them in their own home. Your family members may be pleased at the chance to help you reach the goal of owning your own home.

Research housing finance agencies. These types of agencies extend special mortgate loan programs to moderate and low income buyers, buyers interested in rehabilitating a residence within a targeted area, and additional particular types of buyers as defined by each finance agency. Financing with a housing finance agency, you can be given an interest rate that is below market, down payment help and other perks. Housing finance agencies may assist you with a lower interest rate, help with your down payment, and offer other benefits. The principal purpose of not-for-profit housing finance agencies is promoting the purchase of homes in specific places.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (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 aiding low and moderate-income families get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, helping the buyers to become eligible for a mortgage. Interest rates for an FHA loan normally feature the going interest rate, while the down payment for an FHA mortgage will be less than those of conventional loans. The required down payment can be as low as three percent and the closing costs might be included in the mortgage.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. While it's true that the loans don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment using a second mortgage that closes with the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Instead of the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you part of his home equity to help you get your down payment money. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a slightly higher interest rate on the loan from the seller.

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

Want to discuss down payment options? Give us a call: 720-598-8300.

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