Your Down Payment

Lots of buyers can qualify for a loan, but they don't have a lot of cash to pay the standard down payment. Here's where to get started

Slash the budget and build up savings. Look for ways you can reduce your expenses to put away money for a down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a specific portion of your paycheck transferred into savings. You could look into some big expenses in your budget that you can do without, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or stay local for your annual vacation.

Work a second job and sell things you do not need. Try to find an additional job. This can be exhausting, but the temporary trial can provide your down payment money. You can also get creative about the things you could be able to put up for sale. Maybe you have desirable items you can put up for sale on an online auction, or household goods for a garage or tag sale. You might also explore what your investments could bring if sold.

Borrow from your retirement funds. Check the parameters of your particular program. Many people get down payment money by withdrawing what they need from their IRAs or borrowing from their 401(k) programs. You will need to ensure you are knowledgable about any penalties, the way this may affect on your income taxes, and repayment terms.

Ask for assistance from generous family members. First-time buyers are sometimes fortunate enough to get down payment assistance from thoughtful family members who are willing 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.

Research housing finance agencies. Provisional mortgage programs are provided to homebuyers in certain situations, like low income purchasers or buyers planning to improve houses in a certain part of town, among others. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment help and other advantages. These types of agencies may assist you with a lower interest rate, help with your down payment, and offer other advantages. These non-profit agencies were formed to build up home ownership in specific areas.

Learn about low-down and no-down mortgages.

  • FHA loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low to moderate-income families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, making the buyers eligible for a home loan. Interest rates for an FHA loan are generally the current interest rate, while the down payment requirements with an FHA mortgage will be below those of conventional loans. Closing costs can be financed in the mortgage, while the down payment might be as low as 3% of the total.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan does not require a down payment, has limited closing costs, and provides a competitive interest rate. Although the VA doesn't actually finance the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Usually the piggyback loan is for 10 percent of the purchase price, while the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, rather than having to pull together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you part of his own equity to help you get your down payment funds. You would borrow the majority of the purchase price from a traditional lending institution and finance the remaining amount with the seller. Often, this kind of second mortgage has higher interest.

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

Want to discuss your down payment? Give us a call at 310-379-5997.

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