Putting Together Your Down Payment

Lots of buyers can easily qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Do you want to buy a new house, but don't know how to get together your down payment?

Tighten your belt and save. Turn your budget inside out to uncover ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically placed into savings each pay period. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Work more and sell things you do not 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. You might have desirable items you can put up for sale on an online auction, or household goods for a tag or garage sale. You could also explore what your investments may bring if sold.

Tap into your retirement funds. Explore the specifics of your particular plan. Many people get down payment money from withdrawing what they need from IRAs or borrowing from 401(k) programs. Make sure you understand about any penalties, the effect this could have on income taxes, and repayment terms.

Ask for assistance from generous family members. First-time homebuyers are sometimes fortunate enough to receive down payment help from giving parents and other family members who may be willing to help get them in their own home. Your family members may be inclined to help you reach the goal of owning your own home.

Contact housing finance agencies. Special mortgate loan programs are given to buyers in specific situations, like low income homebuyers or people looking to improve homes in a certain neighborhood, among others. With the help of a housing finance agency, you probably will get a below market interest rate, down payment help and other benefits. Housing finance agencies can help eligible homebuyers with a lower interest rate, get you your down payment, and offer other advantages. These non-profit agencies were formed to boost the value of homes in specific places.

Explore no-down and low-down mortgages.

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low and moderate-income Americans get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgages. FHA provides mortgage insurance to private lenders, enabling buyers who will not be eligible for a conventional loan, to get home financing. Interest rates for an FHA mortgage typically feature the current interest rate, but the down payment for an FHA loan are smaller than those of conventional loans. Closing costs can be covered by the mortgage, while your down payment may be as low as 3% of the total amount.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a low interest rate, no down payment, and limited closing costs. Although the VA does not actually provide the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can finance a down payment with a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the purchase price, while the first mortgage covers 80 percent. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Often, this kind of second mortgage will have a higher rate of interest.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your brand new home will be your reward!

Need to talk about your down payment? Give us a call at 310-379-5997.

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