Your Down Payment

Many people who are looking to buy a new house can easily qualify for a mortgage loan, 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. Scrutinize your budget to find extra money to go toward your down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into savings. Some effective strategies to put together funds include moving into less expensive housing, and skipping a year's vacation.

Sell items you do not really need and get a second job. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also seriously consider the possessions you actually need and the items you migh be able to sell. Multiple small things might add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow money from your retirement plan. Research the specifics of your individual plan. Many homebuyers get down payment money by withdrawing from IRAs or borrowing from their 401(k) programs. You will need to be sure you understand about any penalties, the way this will affect on your taxes, and repayment obligation.

Ask for assistance from generous family members. First-time buyers are often lucky enough to receive help with their down payment help from thoughtful parents and other family members who may be prepared to help get them in their first home. Your family members may be inclined to help you reach the goal of buying your own home.

Learn about housing finance agencies. Special mortgage loans are provided to homebuyers in certain circumstances, such as low income purchasers or people looking to remodel houses in a certain place, among others. With the help of this type of agency, you may receive an interest rate that is below market, down payment assistance and other perks. These types of agencies can help eligible homebuyers with a lower rate of interest, get you your down payment, and offer other assistance. These non-profit agencies exist to promote the value of homes in certain neighborhoods.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get home financing. FHA assists first-time buyers and others who might not be eligible for a traditional mortgage loan on their own, by providing mortgage insurance to the lenders. Interest rates for an FHA mortgage are usually the going interest rate, while the down payment amounts for an FHA mortgage are lower than those of conventional loans. Closing costs may be covered by the mortgage, and the down payment could be as low as 3 percent of the purchase price.

  • VA mortgage loans

    VA loans are backed by the Department of Veterans Affairs. Veterens and service people can qualify for a VA loan, which typically offers a competitive interest rate, no down payment, and minimal closing costs. While the mortgage loans aren't actually issued by the VA, the department certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may finance a down payment using a second mortgage that closes at the same time as the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, instead of needing to put together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you a piece of his own equity to help you get your down payment money. You would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Typically, this type of second mortgage will have a higher rate of interest.

The feeling of accomplishment will be the same, no matter which strategy you use to pull together your down payment. Your new home will be your reward!

Want to discuss down payments? Call us: 503-657-3311.