Putting Together Your Down Payment

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Lots of folks who are looking to buy a new house qualify for various loan programs, but they can't afford a large down payment. Start here

Slash the 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 specific portion of your paycheck is automatically deposited into a savings account each pay period. You could look into some big expenses in your spending history that you can live without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your annual vacation.

Sell items you don't really need and get a part-time job. Perhaps you can find an additional job and build up your earnings. You can also get serious about the possessions you really need and the things you may be able to put up for sale. A closetful of small things may add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you own.

Tap into retirement funds. Explore the details of your individual plan. Many people get down payment money from withdrawing funds from their Individual Retirement Accounts or getting funds out of 401(k) plans. Make sure to find out about the tax ramifications, your obligation for repayment, and possible early withdrawal penalties.

Ask for help from generous family members. First-time buyers somtimes receive help with their down payment assistance from thoughtful family members who are prepared to help get them in their first home. Your family members may be pleased at the chance to help you reach the goal of having your first home.

Research housing finance agencies. These agencies extend provisional mortgate loan programs to low and moderate-income homebuyers, buyers interested in sprucing up a residence in a specific area, and other particular types of buyers as specified by each agency. Working with a housing finance agency, you may be given a below market interest rate, down payment help and other benefits. Housing finance agencies can help eligible buyers with a reduced interest rate, help with your down payment, and offer other advantages. These non-profit programs exist to boost home ownership in certain areas.

Explore no-down and low-down mortgage loans.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low and moderate-income families get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgage loans. FHA offers mortgage insurance to the private lenders, enabling new homebuyers who might not be eligible for a traditional loan, to get a mortgage. Interest rates with an FHA mortgage generally feature the going interest rate, but the down payment amounts for an FHA loan will be smaller than those of conventional loans. Closing costs might be covered by the mortgage, and the down payment might be as low as 3% of the total.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan requires no down payment, has limited closing costs, and provides a competitive interest rate. Although the loans aren't actually provided by the VA, the office certifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, instead of having to put together the typical 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Generally, this form of second mortgage has a higher rate of interest.

Want to discuss down payment options? Give us a call at 877-799-4015.