Building Your Down Payment

Lots of people who would like to buy a new house can easily qualify for several different kinds of mortgages, but they don't have much to pay a down payment. Want to buy a new house, but don't know how to put together a down payment?

Slash your budget and build up savings. Be on the look-out for ways to trim your monthly expenses to put away money for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically deposited 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.

Work a second job and sell items you do not need. Look for a second job. This can be exhausting, but the temporary trial can provide your down payment money. You can also get creative about the items you could be able to put up for sale. A closetful of small items may add up to a fair amount at a garage or tag sale. You might also research what any investments you own will sell for.

Borrow your down payment from your retirement plan. Investigate the parameters of your particular program. You can borrow money from a 401(k) plan for you down payment or perform a withdrawal from an Individual Retirement Account. Make sure you know about any penalties, the effect this may have on your income taxes, and repayment terms.

Ask for help from family members. First-time buyers somtimes receive down payment assistance from gracious family members who may be willing to help them get into their own home. Your family members may be inclined to help you reach the milestone of having your first home.

Learn about housing finance agencies. These agencies offer provisional mortgate loan programs- for moderate and low income borrowers, buyers with an interest in renovating a residence within a specific part of the city, and other groups as defined by the agency. Financing with a housing finance agency, you may receive an interest rate that is below market, down payment help and other incentives. These kinds of agencies can assist eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other assistance. These non-profit programs to build up home ownership in specific places.

Explore no-down and low-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income families qualify for mortgages. An office 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 new homebuyers who may not qualify for a conventional mortgage loan, to get a mortgage. Down payment requirements for FHA mortgages are below those for conventional mortgage loans, even though these mortgages have average interest rates. Closing costs might be included in the mortgage, and your down payment might be as low as 3 percent of the total.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. Although the mortgage loans don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

  • 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" funds 10%. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you a portion of his home equity to help you with your down payment funds. You would finance the majority of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Often, this kind of second mortgage will have a higher rate of interest.

The feeling of accomplishment will be the same, no matter how you manage to come up with your down payment. Your brand new home will be your reward!

Need to talk about the best options for down payments? Call us: 425-508-9988.

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