Putting Together Your Down Payment

Many buyers can easily qualify for a mortgage loan, but they can't afford a large down payment. Here are a few straightforward ways to get together your down payment

Cut expenses and save. Look for ways you can reduce your monthly expenses to set aside money for a down payment. There are bank programs in which a portion of your take-home pay is automatically deposited into savings every pay period. You might look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or skip a vacation.

Work a second job and sell things you don't need. Maybe you can find an additional job to get your down payment money. Additionally, you can put together a comprehensive list of items you can sell. Broken gold jewelry can bring a good price from local jewelers. A closetful of small items might add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.

Borrow from your retirement funds. Explore the specifics of your individual plan. Many homebuyers get down payment money by withdrawing funds from Individual Retirement Accounts or getting money out of their 401(k) plans. Make sure you know about any penalties, the effect this could have on your taxes, and repayment terms.

Ask for help from members of your family. Many buyers somtimes receive help with their down payment assistance from gracious family members who may be eager to help them get into their own home. Your family members may be pleased to help you reach the milestone of owning your own home.

Contact housing finance agencies. Special loan programs are provided to homebuyers in certain situations, like low income purchasers or people looking to remodel houses in a certain neighborhood, among others. With the help of a housing finance agency, you can get an interest rate that is below market, down payment help and other incentives. These kinds of agencies may assist eligible homebuyers with a lower interest rate, help with your down payment, and provide other benefits. These non-profit programs to boost the value of homes in particular areas.

Research no-down and low-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low and moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling buyers who may not qualify for a conventional mortgage loan, to get a mortgage. Down payment amounts for FHA mortgages are lower than those with conventional mortgage loans, although these loans have current interest rates. Closing costs may be included in the mortgage, and the down payment might be as low as 3 percent of the purchase price.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a competitive fixed rate of interest, no down payment, and minimal closing costs. Although the VA doesn't finance the loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to loan you a piece of his home equity to assist you with your down payment funds. You would borrow the largest portion of the purchase price from a traditional lending institution and finance the remaining amount with the seller. Often, this form of second mortgage has higher interest.

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

Want to discuss your down payment? Call us: 720-598-8300.

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