Building Your Down Payment

Many folks who are looking to buy a new home qualify for several different kinds of mortgages, but they don't have a lot of cash to pay a down payment. Want to look into getting a new house, but don't know how you should get together your down payment?

Slash the budget and build up savings. Be on the look-out for ways to reduce your monthly expenses to save toward a down payment. You also might enroll in an automatic savings plan to have a portion of your pay automatically moved into your savings account. You could look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a vacation.

Work more and sell things you don't need. Perhaps you can get an additional job and build up your earnings. You can also get creative about the items you can put up for sale. A closetful of small items can add up to a nice sum at a garage or tag sale. You can also look into what your investments could bring if sold.

Tap into retirement funds. Explore the details for your individual plan. It is possible to pull out funds from a 401(k) for a down payment or withdraw from an IRA. Make sure you understand about any penalties, the way this could affect on your taxes, and repayment obligation.

Ask for a generous gift from your family. Many buyers are sometimes fortunate enough to get help with their down payment assistance from thoughtful family members who are anxious to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of owning your own home.

Learn about housing finance agencies. These agencies provide provisional mortgage loans to low and moderate-income borrowers, buyers interested in remodeling a home within a targeted area, and additional groups as defined by the finance agency. Working with this kind of agency, you may receive an interest rate that is below market, down payment help and other benefits. These kinds of agencies can help eligible buyers with a reduced interest rate, help with your down payment, and provide other advantages. The central goal of non-profit housing finance agencies is to boost residence ownership in specific parts of the city.

Find out about low-down and no-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 vital part in assisting low to moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get home financing. FHA aids first-time buyers and others who may not be eligible for a typical loan on their own, by offering mortgage insurance to the lenders. Interest rates with an FHA mortgage normally feature the current interest rate, but the down payment for an FHA loan are below those of conventional loans. The down payment may go as low as 3 percent while the closing costs might be covered by the mortgage.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. While the mortgage loans don't originate from the VA, the office verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. In most cases the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you part of his home equity to assist you with your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Often, this form of second mortgage has higher interest.

No matter your strategy of getting together your down payment money, the thrill of owning your own home will be just as sweet!

Want to discuss down payment options? Call us: 214-869-7339.