Your Down Payment

Lots of people who would like to purchase a new home can easily qualify for a loan, but they don't have much to put up a down payment. Want to look into getting a new home, but don't know how to put together your down payment?

Slash your budget and build up savings. Turn your budget inside out to find extra money to save for your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically placed into a savings account each pay period. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a vacation.

Work more and sell things you do not need. Perhaps you can find an additional job to get your down payment money. You can also seriously consider the possessions you actually need and the things you may be able to sell. A closetful of small items may add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.

Borrow funds from your retirement plan. Investigate the parameters of your specific plan. You can pull out funds from a 401(k) for a down payment or perform a withdrawal from an IRA. Be sure you understand the tax consequences, repayment terms, and possible penalties for withdrawing early.

Request a gift from family. Many homebuyers are sometimes lucky enough to get help with their down payment assistance from gracious family members who are anxious to help them get into their own home. Your family members may be inclined to help you reach the milestone of buying your own home.

Research housing finance agencies. These agencies offer provisional mortgage programs for low and moderate-income buyers, buyers interested in sprucing up a home within a specific part of the city, and additional particular kinds of buyers as specified by the finance agency. With the help of a housing finance agency, you may get an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies may help eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other assistance. The central mission of not-for-profit housing finance agencies is to boost residence ownership in specific parts of the city.

Research no-down and low-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 an important role in aiding low and moderate-income individuals qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who might not be eligible for a traditional mortgage by themselves, by providing mortgage insurance to private lenders. Interest rates for an FHA mortgage normally feature the current interest rate, while the down payment amounts for an FHA loan are below those of conventional loans. Closing costs might be included in the mortgage, and the down payment might be as low as 3% of the total amount.

  • VA loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a low fixed rate of interest, no down payment, and limited closing costs. While the mortgage loans are not actually financed by the VA, the office verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The borrower pays the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you some of his own equity to help you get your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a somewhat higher rate with the loan financed by the seller.

No matter your strategy of pulling together your down payment, the thrill of living in your own home will be just as sweet!

Want to discuss your down payment? Give us a call: 425-508-9988.

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