Your Down Payment

Lots of buyers can qualify for a loan, but they don't have a lot of money 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 your budget to find extra money to save for your down payment. There are bank programs through which a portion of your paycheck is automatically transferred into savings every pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Sell things you don't need and find a part-time job. Maybe you can get a second job to get your down payment money. You can also get creative about the things you migh be able to put up for sale. Maybe you have desirable items you can put up for sale on an online auction, or quality household items for a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from a retirement plan. Investigate the parameters of your particular program. Some homebuyers get down payment money by withdrawing from their Individual Retirement Accounts or borrowing from 401(k) programs. Be sure you know about any penalties, the effect this may have on income taxes, and repayment terms.

Ask for assistance from generous family members. First-time buyers are often fortunate enough to get down payment assistance from thoughtful family members who are eager to help them get into their own home. Your family members may be pleased at the chance to help you reach the milestone of having your own home.

Learn about housing finance agencies. Special mortgage programs are offered to homebuyers in certain circumstances, such as low income purchasers or buyers planning to renovating homes in a certain area, among others. Working through a housing finance agency, you can receive a below market interest rate, down payment help and other advantages. These kinds of agencies can help eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit programs exist to promote the value of homes in certain neighborhoods.

Research no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, helping the buyers to become eligible for a home loan. Interest rates for an FHA loan are typically the market interest rate, while the down payment requirements with an FHA mortgage are lower than those of conventional loans. The required down payment can be as low as 3 percent and the closing costs could be covered by the mortgage.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. While it's true that the mortgage loans are not actually issued by the VA, the department verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You can finance your down payment with a second mortgage that closes with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to lend you some of his home equity to help you with your down payment money. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this kind of second mortgage will have higher interest.

No matter your method of getting together your down payment, the satisfaction of owning your own home will be just as great!

Need to talk about down payment options? Give us a call: 425-508-9988.