Putting Together Your Down Payment

Many buyers qualify for a mortgage loan, but they don't have a lot of cash to pay a down payment. Want to look into getting a new home, but don't know how to get together a down payment?

Tighten your belt and save. Scrutinize the budget to find extra money to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. Some practical ways to save additional funds include moving into housing that is less expensive, and staying home for your vacation this year.

Sell things you do not really need and find a second job. Try to get an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can put together an exhaustive inventory of items you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. You might have collectibles you can put up for sale at an online auction, or household goods for a garage or tag sale. Also, you might want to look into selling any investments you hold.

Tap into your retirement funds. Investigate the provisions of your particular program. Some people get down payment money from withdrawing what they need from their Individual Retirement Accounts or pulling money out of their 401(k) plans. You will want to be sure you understand about any penalties, the effect this may have on your taxes, and repayment terms.

Request a gift from your family. First-time homebuyers are sometimes fortunate enough to get down payment assistance from caring parents and other family members who may be able to help get them in their first home. Your family members may be willing to help you reach the milestone of having your own home.

Learn about housing finance agencies. These types of agencies provide provisional loan programs to moderate and low income buyers, buyers with an interest in rehabilitating a home in a targeted part of the city, and additional groups as specified by each agency. With the help of a housing finance agency, you may get a below market interest rate, down payment help and other incentives. Housing finance agencies can assist eligible buyers with a reduced interest rate, get you your down payment, and provide other assistance. These non-profit programs to boost the value of homes in certain neighborhoods.

Learn about low-down and no-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low to moderate-income buyers get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling buyers who may not qualify for a traditional loan, to get a mortgage. Interest rates for an FHA loan are typically the current interest rate, while the down payment with an FHA mortgage are below those of conventional loans. Closing costs can be included in the mortgage, while your down payment can be as low as 3% of the total amount.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a low fixed interest rate, no down payment, and reduced closing costs. While the VA does not actually issue the loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the home's price, and the first mortgage finances 80 percent. The borrower pays the remaining 10%, instead of needing to put together the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. You would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Usually you'll pay a slightly higher rate with the loan financed by the seller.

No matter how you gather your down payment, the thrill of living in your own home will be just as great!

Need to talk about down payment options? Call us: 425-508-9988.

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