Putting Together Your Down Payment

Lots of folks who are looking to purchase a new home qualify for various loan programs, but they can't afford a large down payment. Want to buy a new home, but aren't sure how to put together a down payment?

Slash the budget and build up savings. Look for ways to trim your monthly expenses to put away money for a down payment. You also might enroll in an automatic savings plan at your bank to have a portion of your payroll automatically transferred into a savings account. You might look into some big expenses in your spending history that you can give up, or trim, 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 do not need. Try to get an additional job. This can be exhausting, but the temporary trial can provide your down payment money. You can also get serious about the possessions you actually need and the items you could be able to put up for sale. Maybe you own collectibles you can sell at an auction website, or quality household goods for a tag or garage sale. You could also explore what your investments may bring if sold.

Borrow money from your retirement plan. Investigate the parameters of your retirement program. It is possible to pull out funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. You will need to be sure you are clear about any penalties, the effect this may have on your taxes, and repayment obligation.

Request a gift from your family. First-time homebuyers are often fortunate enough to get down payment assistance from caring parents and other family members who may be 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.

Contact housing finance agencies. These agencies provide special loan programs for moderate and low income buyers, buyers interested in sprucing up a house in a specific part of the city, and other particular kinds of buyers as specified by each agency. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can assist you with a reduced interest rate, get you your down payment, and offer other assistance. The main mission of non-profit housing finance agencies is to promote home ownership in specific areas.

Explore no-down and low-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income buyers qualify for mortgages. An office of the United States 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 conventional mortgage loan on their own, by providing mortgage insurance to the private lenders. Down payment sums for FHA loans are below those with traditional mortgage loans, even though these loans have average interest rates. The required down payment may be as low as 3 percent while the closing costs might be financed in the mortgage.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a reasonable rate of interest, no down payment, and reduced closing costs. Although the VA does not actually finance the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.

  • Piggy-back loans

    You may finance your down payment using a second mortgage that closes with the first. Generally the piggyback loan is for 10 percent of the home's amount, and the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a slightly higher interest rate on the loan financed by the seller.

The feeling of accomplishment will be the same, no matter which approach you use to come up with the down payment. Your brand new home will be well worth it!

Need to talk about your down payment? Call us: 503-657-3311.