Your Down Payment

Putting Together Your Down Payment

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Many buyers can easily qualify for various loan programs, but they don't have a lot of money to pay a down payment. Here are a few ideas:

Tighten your belt and save. Scrutinize your budget to find ways you can cut expenses to go toward your down payment. You may also decide to enroll in an automatic savings plan to have a portion of your pay automatically transferred into a savings account. You might look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your vacation.

Work more and sell things you do not need. Maybe you can find a second job and build up your earnings. In addition, you can put together an exhaustive list of things you can sell. Unused gold jewelry can be sold at local jewelry stores. 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 can also research what your investments will sell for.

Tap into retirement funds. Check the provisions of your retirement program. Some people get down payment money from withdrawing funds from their Individual Retirement Accounts or getting funds out of 401(k) programs. You will need to be sure you are clear about any penalties, the way this may affect on your taxes, and repayment terms.

Ask for help from generous family members. First-time buyers sometimes get help with their down payment help from caring family members who are prepared to help get them in their own home. Your family members may be eager to help you reach the goal of buying your own home.

Learn about housing finance agencies. These agencies offer special loan programs for moderate and low income borrowers, buyers with an interest in rehabilitating a house in a specific part of the city, and additional particular types of buyers as defined by the finance agency. Financing through this kind of agency, you probably will receive an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may assist eligible homebuyers with a reduced interest rate, get you your down payment, and provide other benefits. The primary mission of non-profit housing finance agencies is to boost the purchase of homes in targeted parts of the city.

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

  • Federal Housing Administration (FHA) mortgage loansThe Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income individuals 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 would not be eligible for a conventional mortgage by themselves, by offering mortgage insurance to the lenders. Interest rates with an FHA mortgage are normally the current interest rate, but the down payment amounts with an FHA mortgage will be below those of conventional loans. Closing costs may be included in the mortgage, and the down payment might be as low as 3% of the total amount.
  • VA mortgage loansVA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which usually offers a low rate of interest, no down payment, and minimal closing costs. Although the VA does not actually finance the mortgage loans, it does certify eligibility to qualify for a VA loan.
  • Piggy-back loansYou can fund a down payment with a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, instead of come up with the usual 20% down payment.
  • Carry-Back loansWe a seller carries back a second mortgage, the seller loans you part of his or her equity. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a slightly higher interest rate with the loan from the seller.

No matter your method of pulling together your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!

Want to discuss down payments? Give us a call: 469-322-4391.