Putting Together Your Down Payment

Many borrowers qualify for a loan, but they don't have a large sum of cash to pay the standard down payment. Below are a few methods that will help you put together your down payment

Cut expenses and save. Turn your budget upside-down to discover extra money to save for your down payment. You also might enroll in an automatic savings plan to automatically have a specific portion of your paycheck moved into a savings account. Some effective methods to put together funds include moving into less expensive housing, and skipping a year's vacation.

Sell items you do not need and find a part-time job. Perhaps you can get a second job to get your down payment money. You can also seriously consider the possessions you actually need and the things you could be able to sell. Multiple small items can add up to a nice sum at a garage or tag sale. You can also explore what your investments will sell for.

Borrow from your retirement funds. Explore the details for your particular plan. Many homebuyers get down payment money by withdrawing funds from Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure you understand the tax ramifications, repayment terms, and early withdrawal penalties.

Ask for a generous gift from your family. Many buyers are often fortunate enough to receive help with their down payment assistance from caring family members who may be willing to help them get into their own home. Your family members may be pleased to help you reach the goal of owning your first home.

Research housing finance agencies. These agencies provide provisional loan programs for moderate and low income borrowers, buyers with an interest in remodeling a residence within a particular part of the city, and additional particular kinds of buyers as defined by each agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment help and other incentives. Housing finance agencies can assist eligible buyers with a lower interest rate, get you your down payment, and offer other assistance. The main purpose of not-for-profit housing finance agencies is to boost residence ownership in certain parts of the city.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (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 helping low to moderate-income Americans get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be able to qualify for a typical loan by themselves, by providing mortgage insurance to private lenders. Interest rates for an FHA mortgage normally feature the going interest rate, but the down payment amounts with an FHA loan are less than those of conventional loans. The required down payment can go as low as three percent while the closing costs can be covered by the mortgage loan.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. While the VA does not issue the mortgages, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you a portion of his own equity to help you with your down payment money. You would finance the majority of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Generally, this type of second mortgage will have higher interest.

No matter your method of getting together your down payment funds, the satisfaction of reaching the goal of owning your own home will be just as sweet!

Want to discuss down payments? Call us: (585) 282-0960.