Putting Together Your Down Payment

Lots of borrowers can qualify for various loan programs, but they don't have much to put up a down payment. Want to look into getting a new house, but aren't sure how you should put together your down payment?

Slash your budget and build up savings. Turn your budget upside-down to uncover ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan to automatically have a predetermined amount from your take-home pay transferred into savings. Some effective methods to put together funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Sell items you don't need and get a part-time job. Maybe you can find an additional job to get your down payment money. You can also seriously consider the possessions you really need and the things you may be able to put up for sale. A closetful of small things could add up to a fair amount at a garage or tag sale. Also, you can consider selling any investments you own.

Borrow from a retirement plan. Research the details for your particular plan. Many homebuyers get down payment money from withdrawing what they need from Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you understand about any penalties, the effect this will have on income taxes, and repayment obligation.

Ask for assistance from members of your family. First-time homebuyers somtimes get help with their down payment assistance from giving family members who may be able to help get them in their own home. Your family members may be happy at the chance to help you reach the goal of having your first home.

Learn about housing finance agencies. Provisional mortgate loan programs are extended to buyers in certain situations, like low income buyers or buyers planning to renovating houses in a certain neighborhood, among others. With the help of this kind of agency, you can get a below market interest rate, down payment help and other perks. These kinds of agencies can help eligible buyers with a lower rate of interest, help with your down payment, and provide other advantages. The primary goal of non-profit housing finance agencies is to promote residence ownership in particular places.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, making the buyers eligible for a mortgage. Interest rates for an FHA loan typically feature the current interest rate, while the down payment with an FHA mortgage will be less than those of conventional loans. Closing costs may be covered by the mortgage, while your down payment may be as low as 3% of the purchase price.

  • VA loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a low fixed rate of interest, no down payment, and minimal closing costs. Although the loans don't originate from the VA, the department verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment using a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage covers 80 percent. The borrower pays the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you a portion of his own equity to help you get your down payment funds. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Generally, this type of second mortgage has higher interest.

The satisfaction will be the same, no matter which strategy you use to come up with the down payment. Your brand new home will be worth it!

Need to talk about down payments? Give us a call at 503-657-3311.