Putting Together Your Down Payment

Many people who would like to buy a new home can qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Get started here

Cut expenses and save. Look for ways you can reduce your monthly expenses to set aside funds for a down payment. There are bank programs in which some of your take-home pay is automatically deposited into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your family vacation.

Work a second job and sell things you don't need. Look for a second job. This can be rough, but the temporary trial can provide your down payment money. In addition, you can make an exhaustive inventory of things you may be able to sell. Unused gold jewelry can bring a good amount from local jewelry stores. Multiple small items could add up to a fair amount at a garage or tag sale. You might also research what any investments you have will sell for.

Tap into retirement funds. Research the details of your particular plan. You can take out funds from a 401(k) plan for you down payment or get a withdrawal from an IRA. Be sure you know about any penalties, the way this could affect on your income taxes, and repayment obligation.

Ask for a gift from family. Many buyers somtimes receive down payment assistance from thoughtful family members who may be anxious to help them get into their first home. Your family members may be willing to help you reach the milestone of having your own home.

Research housing finance agencies. Special loan programs are provided to homebuyers in specific situations, like low income homebuyers or future homeowners planning to renovating houses in a certain place, among others. Working through a housing finance agency, you can be given a below market interest rate, down payment help and other incentives. Housing finance agencies may help you with a lower interest rate, get you your down payment, and offer other benefits. These non-profit agencies to boost community in particular places.

Explore no-down and low-down mortgage loans.

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income individuals get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be able to qualify for a traditional mortgage loan on their own, by offering mortgage insurance to lenders. Down payment sums for FHA loans are below those with traditional mortgage loans, although these mortgages hold average rates of interest. Closing costs can be included in the mortgage, while the down payment may be as low as 3 percent of the total amount.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. While the VA does not provide the loans, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  You may finance a down payment through a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  In the case of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually this type of second mortgage will have a higher rate of interest.

Want to discuss down payment options? Call us at 425-508-9988.