Your Down Payment

Many buyers qualify for a mortgage loan, but they can't afford a large down payment. Want to buy a new house, but don't know how to put together your down payment?

Slash your budget and build up savings. Scrutinize the budget to uncover extra money to save for your down payment. Also, you can look into bank programs in which a portion of your paycheck is automatically transferred into savings every pay period. You would be wise to look into some big expenses in your spending history that you can live without, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a family vacation.

Work more and sell items you don't need. Maybe you can get a second job to get your down payment money. Additionally, you can put together a comprehensive list of things you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelers. You may have desirable items you can put up for sale on an online auction, or household items for a garage or tag sale. You can also explore what your investments could bring if sold.

Borrow funds from your retirement plan. Explore the details of your particular plan. Some people get down payment money by withdrawing what they need from their IRAs or pulling funds out of 401(k) plans. Make sure you understand the tax consequences, your obligation for repayment, and any penalties for withdrawing early.

Ask for help from generous members of your family. First-time buyers are often lucky enough to receive down payment help from caring parents and other family members who may be willing to help them get into their first home. Your family members may be willing to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Provisional mortgage programs are provided to buyers in certain circumstances, such as low income homebuyers or future homeowners planning to improve houses in a targeted neighborhood, among others. With the help of a housing finance agency, you probably will get a below market interest rate, down payment assistance and other incentives. Housing finance agencies can assist eligible buyers with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit programs to boost the value of homes in specific areas.

Research no-down and low-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low and moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who may not be eligible for a conventional mortgage on their own, by offering mortgage insurance to the lenders. Interest rates with an FHA mortgage are typically the market interest rate, but the down payment for an FHA mortgage will be below those of conventional loans. The down payment may be as low as 3 percent and the closing costs might be financed in the mortgage loan.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a competitive fixed interest rate, no down payment, and minimal closing costs. While the VA does not issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the home's price, while the first mortgage covers 80 percent. Instead of the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you a piece of his own equity to help you get your down payment money. You would finance the majority of the purchase price with a traditional mortgage lender and borrow the remaining amount from the seller. Usually you'll pay a somewhat higher rate on the loan financed by the seller.

No matter how you gather your down payment funds, the satisfaction of reaching the goal of living in your own home will be just as great!

Want to discuss the best options for down payments? Give us a call at 503-657-3311.