Putting Together Your Down Payment

Many buyers qualify for several different kinds of mortgages, but they don't have a lot of cash to pay the standard down payment. Start here

Reduce expenses and save. Be on the look-out for ways you can trim your monthly expenditures to save toward a down payment. You also could enroll in an automatic savings plan at your bank to automatically have a specific portion of your paycheck transferred into savings. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your family vacation.

Work more and sell things you do not need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can put together an exhaustive inventory of things you may be able to sell. Broken gold jewelry can bring a good price from local jewelry stores. Maybe you own desirable items you can sell at an online auction, or quality household items for a tag or garage sale. You can also research what any investments you own could sell for.

Borrow from your retirement funds. Research the details for your individual plan. Many people get down payment money from withdrawing funds from their IRAs or pulling money out of their 401(k) programs. Be sure you understand about any penalties, the way this could affect on taxes, and repayment obligation.

Ask for assistance from generous members of your family. Many buyers are sometimes lucky enough to get down payment assistance from caring parents and other family members who may be prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of buying your own home.

Learn about housing finance agencies. Provisional mortgage loans are provided to buyers in certain situations, like low income homebuyers or people looking to renovating homes in a targeted area, among others. With the help of this type of agency, you may get an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist you with a reduced interest rate, get you your down payment, and provide other benefits. The central purpose of not-for-profit housing finance agencies is promoting residential ownership in targeted areas.

Learn about low-down and no-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting home financing. FHA aids first-time buyers and others who might not be eligible for a typical mortgage loan by themselves, by providing mortgage insurance to lenders. Down payment sums for FHA mortgages are below those of typical mortgage loans, although these mortgages hold average rates of interest. Closing costs may be covered by the mortgage, while your down payment might be as low as 3% of the total amount.

• VA mortgages

  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 the mortgages don't originate from the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You may fund your down payment with 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%. Rather than the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. You would finance the largest portion of the purchase price with a traditional mortgage lending institution and borrow the remainder from the seller. Generally, this kind of second mortgage will have a higher rate of interest.

Need to talk about the best options for down payments? Call us: 7205988300.