Building Your Down Payment

Lots of borrowers can qualify for a mortgage loan, but they can't afford a large down payment. Do you want to look into getting a new home, but don't know how to put together a down payment?

Slash your budget and build up savings. Scrutinize the budget to uncover extra money to go toward your down payment. You may also decide to enroll in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into a savings account. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or skip a vacation.

Sell things you don't need and get a part-time job. Look for an additional job. This can be exhausting, but the temporary trial can provide your down payment money. You can also seriously consider the possessions you really need and the things you can sell. Maybe you own collectibles you can sell on an online auction, or household items for a tag or garage sale. You can also research what any investments you own could sell for.

Borrow from your retirement funds. Research the details for your particular plan. Some homebuyers get down payment money by withdrawing funds from their IRAs or getting money out of 401(k) programs. Make sure to learn about the tax ramifications, your obligation for repayment, and any penalties for withdrawing early.

Ask for help from members of your family. First-time homebuyers somtimes receive down payment help from gracious parents and other family members who may be able to help get them in their first home. Your family members may be eager to help you reach the goal of having your own home.

Contact housing finance agencies. These agencies extend provisional mortgate loan programs to moderate and low income homebuyers, buyers interested in remodeling a residence within a particular area, and additional certain types of buyers as defined by each agency. With the help of a housing finance agency, you can get a below market interest rate, down payment help and other benefits. Housing finance agencies can help eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other benefits. The primary mission of not-for-profit housing finance agencies is build up the purchase of homes in particular parts of the city.

Learn about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income individuals qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans. FHA aids first-time homebuyers and others who might not be eligible for a traditional mortgage loan on their own, by providing mortgage insurance to lenders. Down payment amounts for FHA loans are below those for typical mortgages, even though these mortgages have average rates of interest. The down payment may be as low as 3 percent while the closing costs might be covered by the mortgage.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan requires no down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. Although the VA doesn't finance the loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Typically you'll pay a slightly higher interest rate on the loan from the seller.

No matter your strategy of putting together your down payment, the thrill of living in your own home will be just as sweet!

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

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