Your Down Payment

Lots of people who are looking to buy a new house can qualify for a loan, but they don't have a lot of money to put up the standard down payment. Want to buy a new house, but don't know how to get together a down payment?

Tighten your belt and save. Look for ways to reduce your expenses to save toward a down payment. There are bank programs through which a specific portion of your paycheck is automatically deposited into savings each pay period. Some effective methods to put together funds include moving into a residence that is less expensive, and staying home for your vacation for a year or two.

Work more and sell things you don't need. Try to get a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. Additionally, you can make an exhaustive list of items you can sell. Unworn gold jewelry can be sold at local jewelry stores. You may have desirable items you can put up for sale on an auction website, or quality household goods for a garage or tag sale. You can also explore what any investments you own may bring if sold.

Borrow money from your retirement plan. Check the provisions of your specific program. Many people get down payment money by withdrawing from IRAs or taking funds out of their 401(k) programs. Be sure to learn about the tax ramifications, your obligation for repaying funds, and penalties for withdrawing early.

Ask for a generous gift from your family. Many buyers are often fortunate enough to receive down payment assistance from giving parents and other family members who may be prepared to help them get into their own home. Your family members may be willing to help you reach the milestone of buying your own home.

Contact housing finance agencies. Provisional mortgage programs are offered to buyers in specific circumstances, such as low income homebuyers or buyers looking to renovating houses in a certain area, among others. Financing through this type of agency, you can receive a below market interest rate, down payment help and other benefits. These types of agencies can help you with a lower interest rate, get you your down payment, and offer other assistance. The primary goal of not-for-profit housing finance agencies is promoting residence ownership in certain areas.

Learn about low-down and no-down mortgage loans.

• FHA mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgage loans. FHA provides mortgage insurance to private lenders, enabling buyers who might not qualify for a typical mortgage loan, to obtain a mortgage. Interest rates with an FHA mortgage usually feature the market interest rate, but the down payment with an FHA mortgage will be less than those of conventional loans. Closing costs might be included in the mortgage, and the down payment may be as low as 3% of the total.

• VA mortgages

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a low rate of interest, no down payment, and reduced closing costs. While it's true that the mortgage loans don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  You can finance your down payment through a second mortgage that closes with the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to loan you part of his home equity to help you get your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Typically you will pay a somewhat higher rate with the loan financed by the seller.

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

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