Putting Together Your Down Payment

Many borrowers can qualify for several different kinds of mortgages, but they don't have a large sum of cash to pay a down payment. Here are a few straightforward ways to get together your down payment

Slash the budget and build up savings. Be on the look-out for ways you can trim your monthly expenditures to set aside funds for a down payment. You could also decide to enroll in an automatic savings plan to have a percentage of your pay automatically transferred into savings. Some effective methods to put together funds include moving into less expensive housing, and staying home for your family vacation this year.

Sell items you do not really need and get a part-time job. Perhaps you can find an additional job and save your earnings. You can also get creative about the items you can put up for sale. Multiple small items might add up to a nice sum at a garage or tag sale. You could also look into what your investments will sell for.

Borrow money from a retirement plan. Research the details of your particular plan. Many homebuyers get down payment money from withdrawing from their IRAs or borrowing from their 401(k) plans. Be sure to learn about the tax ramifications, repayment terms, and penalties for withdrawing early.

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

Learn about housing finance agencies. These agencies provide provisional mortgage loans to low and moderate-income homebuyers, buyers with an interest in rehabilitating a home in a particular part of the city, and additional groups as defined by the agency. With the help of this kind of agency, you may receive a below market interest rate, down payment assistance and other advantages. These kinds of agencies can help you with a reduced rate of interest, get you your down payment, and offer other benefits. The central purpose of not-for-profit housing finance agencies is promoting residential ownership in specific parts of the city.

Explore no-down and low-down mortgages.

  • FHA loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low and moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who may not be able to qualify for a conventional mortgage loan by themselves, by providing mortgage insurance to the private lenders. Interest rates with an FHA loan normally feature the current interest rate, but the down payment with an FHA mortgage are less than those of conventional loans. Closing costs can be financed in the mortgage, while your down payment may be as low as 3 percent of the total.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan requires no down payment, has reduced closing costs, and offers a competitive interest rate. Even though the mortgages don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Generally the piggyback loan is for 10 percent of the home's price, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you a piece of his own equity to assist you with your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and borrow the remainder from the seller. Usually you will pay a somewhat higher rate with the loan from the seller.

No matter how you gather your down payment, the thrill of owning your own home will be just as sweet!

Want to discuss the best options for down payments? Call us: 214-869-7339.