Building Your Down Payment

Many borrowers can easily qualify for a loan, but they don't have much to pay the standard down payment. Start here

Reduce expenses and save. Be on the look-out for ways you can trim your expenses to set aside money for a down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically transferred into a savings account each pay period. Some effective ways to put together funds include moving into a residence that is less expensive, and skipping your vacation for a year or two.

Work a second job and sell things you don't need. Look for a second job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can put together an exhaustive list of things you can sell. Broken gold jewelry can bring a good price from local jewelers. A closetful of small things could add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you hold.

Tap into your retirement funds. Investigate the provisions of your particular plan. You can pull out money from a 401(k) plan for you down payment or withdraw from an IRA. Be sure you know about any penalties, the effect this will have on your taxes, and repayment obligation.

Request a generous gift from family. First-time homebuyers are sometimes lucky enough to receive help with their down payment assistance from thoughtful family members who are anxious to help them get into their first home. Your family members may be willing to help you reach the goal of having your own home.

Research housing finance agencies. Provisional mortgate loan programs are offered to buyers in certain circumstances, such as low income purchasers or people looking to improve homes in a targeted part of town, among others. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment help and other perks. These types of agencies may assist you with a lower rate of interest, get you your down payment, and offer other advantages. These non-profit programs exist to boost the value of homes in particular places.

Find out about low-down and no-down mortgage loan programs.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which functions as 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 mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who would not be able to qualify for a traditional mortgage loan by themselves, by offering mortgage insurance to the lenders. Down payment requirements for FHA loans are lower than those with traditional mortgage loans, even though these loans come with average rates of interest. Closing costs may be included in the mortgage, while the down payment can be as low as 3 percent of the total.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people qualify for a VA loan, which usually offers a low fixed interest rate, no down payment, and reduced closing costs. While the mortgage loans don't originate from the VA, the office verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You can fund your down payment with a second mortgage that closes at the same time as the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional lending institution and borrow the remainder from the seller. Usually this kind of second mortgage has a higher rate of interest.

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

Need to talk about down payment options? Call us at 720-598-8300.