Building Your Down Payment

Many buyers qualify for several different kinds of mortgages, but they don't have much to pay a down payment. Here's where you start

Slash your budget and build up savings. Turn your budget inside out to uncover extra money to save for your down payment. There are bank programs through which a portion of your paycheck is automatically transferred into savings each pay period. Some practical ways to save additional funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work a second job and sell items you don't need. Maybe you can find an additional job and save your earnings. Additionally, you can put together an exhaustive list of things you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelry stores. Maybe you have collectibles you can put up for sale on an auction website, or quality household items for a tag or garage sale. Also, you can think about selling any investments you hold.

Tap into retirement funds. Explore the specifics for your individual plan. You may take out funds from a 401(k) for you down payment or perform a withdrawal from an Individual Retirement Account. Make sure you understand about any penalties, the effect this will have on your taxes, and repayment terms.

Ask for a gift from your family. First-time homebuyers are sometimes fortunate enough to get help with their down payment assistance from thoughtful family members who are eager to help them get into their own home. Your family members may be pleased at the chance to help you reach the milestone of having your own home.

Learn about housing finance agencies. These agencies offer special mortgage loans to moderate and low income borrowers, buyers interested in remodeling a house in a targeted part of the city, and additional specific kinds of buyers as defined by each finance agency. With the help of this kind of agency, you may receive a below market interest rate, down payment assistance and other incentives. These kinds of agencies can assist eligible homebuyers with a lower rate of interest, get you your down payment, and offer other assistance. These non-profit agencies to promote home ownership in specific areas.

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

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income families get mortgages. 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, ensuring the buyers are eligible for a mortgage. Interest rates for an FHA loan are usually the current interest rate, while the down payment requirements with an FHA loan will be below those of conventional loans. Closing costs might be financed in the mortgage, and your down payment can be as low as 3% of the total.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a competitive fixed rate of interest, no down payment, and minimal closing costs. Although the VA does not finance the mortgages, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes with the first. Most of the time, the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The borrower covers the remaining 10%, instead of putting the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you a portion of his home equity to help you get your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically you'll pay a slightly higher rate on the loan financed by the seller.

No matter your strategy of pulling together your down payment, the thrill of owning your own home will be just as sweet!

Want to discuss the best options for down payments? Give us a call: 720-598-8300.

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