Putting Together Your Down Payment

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Lots of people who would like to purchase a new home qualify for various loan programs, but they don't have a lot of money to pay a down payment. Do you want to look into getting a new home, but don't know how to put together a down payment?

Slash the budget and build up savings. Be on the look-out for ways to reduce your expenses to save toward a down payment. Also, you can look into bank programs through which a specific portion of your paycheck is automatically transferred into savings each pay period. Some practical approaches to put together funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Sell things you don't need and find a second job. Perhaps you can get a second job to get your down payment money. You can also get creative about the items you can put up for sale. Maybe you own collectibles you can put up for sale at an auction website, or household items for a garage or tag sale. You can also look into what your investments may sell for.

Tap into your retirement funds. Research the details of your individual plan. Some homebuyers get down payment money from withdrawing from Individual Retirement Accounts or taking money out of their 401(k) plans. Be sure you understand about any penalties, the way this could affect on your taxes, and repayment obligation.

Ask for a generous gift from your family. First-time buyers are often lucky enough to get down payment assistance from thoughtful parents and other family members who may be eager to help them get into their first home. Your family members may be pleased to help you reach the goal of having your first home.

Learn about housing finance agencies. These types of agencies offer provisional mortgage loans for moderate and low income homebuyers, buyers with an interest in sprucing up a residence within a specific part of the city, and other specific types of buyers as specified by each finance agency. With the help of this type of agency, you can receive an interest rate that is below market, down payment help and other incentives. These types of agencies may help eligible buyers with a lower interest rate, help with your down payment, and provide other benefits. The central goal of non-profit housing finance agencies is to promote home ownership in specific parts of the city.

Research no-down and low-down mortgage loan programs.

• FHA mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income individuals get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to get mortgage loans. FHA assists first-time buyers and others who might not be able to qualify for a traditional mortgage loan on their own, by offering mortgage insurance to the lenders. Interest rates for an FHA loan are typically the current interest rate, but the down payment for an FHA loan will be less than those of conventional loans. Closing costs might be financed within the mortgage, while your down payment might be as low as 3% of the purchase price.

• VA mortgage loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a competitive interest rate, no down payment, and limited closing costs. Although the VA does not finance the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller commits to loan you a piece of his home equity to help you get your down payment money. You would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remainder with the seller. Generally, this type of second mortgage will have a higher rate of interest.

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

Need to talk about the best options for down payments?

Give us a call: 612-749-4914

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