Your Down Payment

Lots of folks who would like to buy a new home can qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up the standard down payment. Here's where to get started

Slash your budget and build up savings. Be on the look-out for ways to reduce your expenses to save toward a down payment. You might also decide to enroll in an automatic savings plan to automatically have a specific amount from your paycheck transferred into a savings account. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or stay local for your vacation.

Work more and sell things you don't need. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the items you can put up for sale. Multiple small items might add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow from your retirement funds. Investigate the provisions of your specific program. Many homebuyers get down payment money from withdrawing what they need from their Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you comprehend the tax consequences, repayment terms, and possible penalties for withdrawing early.

Request a gift from family. Many homebuyers are often fortunate enough to get help with their down payment assistance from thoughtful parents and other family members who may be anxious to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your first home.

Research housing finance agencies. Provisional loan programs are offered to buyers in specific circumstances, such as low income homebuyers or future homeowners planning to improve homes in a specific place, among others. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment help and other incentives. These types of agencies may help eligible homebuyers with a reduced interest rate, get you your down payment, and offer other assistance. The principal purpose of not-for-profit housing finance agencies is to promote home ownership in certain areas.

Find out about low-down and no-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 an important part in helping low to moderate-income individuals get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgage loans. FHA assists first-time homebuyers and others who might not be eligible for a conventional loan on their own, by providing mortgage insurance to lenders. Interest rates with an FHA loan are generally the current interest rate, while the down payment with an FHA mortgage will be less than those of conventional loans. Closing costs can be financed within the mortgage, while the down payment might be as low as 3% of the total.

• VA mortgages

  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 limited closing costs, and provides a competitive rate of interest. Even though the mortgage loans are not actually financed by the VA, the office certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion 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 finance the remainder with the seller. Usually you will 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 come up with the down payment. Your new home will be your reward!

Need to talk about down payment options? Call us at (585) 282-0960.