Putting Together Your Down Payment

Many buyers can qualify for various loan programs, but they can't afford a large down payment. Below are a few methods that will help you get together your down payment

Tighten your belt and save. Scrutinize the budget to find ways you can cut expenses to save for your down payment. There are bank programs through which a specific portion of your take-home pay is automatically deposited into a savings account every pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you may move into less expensive housing, or skip a family vacation.

Work a second job and sell items you do not need. Perhaps you can get an additional job and build up your earnings. You can also seriously consider the possessions you really need and the things you can sell. Multiple small things could add up to a fair amount at a garage or tag sale. You might also look into what any investments you hold could sell for.

Tap into retirement funds. Explore the details for your individual plan. It is possible to pull out money from a 401(k) plan for a down payment or withdraw from an IRA. Make sure to learn about the tax consequences, your obligation for repaying the money, and early withdrawal penalties.

Ask for a gift from family. Many buyers somtimes get help with their down payment help from caring family members who are anxious to help them get into their first home. Your family members may be pleased at the chance to help you reach the goal of having your first home.

Learn about housing finance agencies. Special loan programs are provided to buyers in certain circumstances, such as low income purchasers or people looking to remodel houses in a particular neighborhood, among others. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist you with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit agencies were established to promote community in specific neighborhoods.

Explore no-down and low-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low and moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, helping the buyers to become eligible for a mortgage. Down payment amounts for FHA loans are below those of typical mortgages, although these loans hold current interest rates. The down payment may be as low as 3 percent while the closing costs could be financed in the mortgage loan.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a competitive fixed rate of interest, no down payment, and limited closing costs. While the mortgage loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can finance your down payment with a second mortgage that closes along with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow a portion of the seller's home equity.. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher rate with the loan financed by the seller.

The feeling of accomplishment will be the same, no matter how you manage to put together the down payment. Your new home will be well worth it!

Want to discuss the best options for down payments? Give us a call at 310-379-5997.

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