Your Down Payment

Lots of borrowers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few tips:

Reduce expenses and save. Turn your budget inside out to discover ways you can cut expenses to save for your down payment. You might also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically deposited into a savings account. You would be wise to look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your annual vacation.

Work a second job and sell things you do not need. Maybe you can get an additional job and save your earnings. You can also get creative about the items you can put up for sale. Multiple small items can add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into your retirement funds. Check the parameters of your particular plan. Some people get down payment money from withdrawing from IRAs or taking money out of 401(k) programs. Be sure you understand the tax consequences, repayment terms, and possible penalties for withdrawing early.

Ask for a generous gift from your family. First-time homebuyers somtimes receive down payment help from thoughtful family members who may be prepared to help them get into their own home. Your family members may be pleased at the chance to help you reach the milestone of buying your own home.

Research housing finance agencies. These agencies extend special mortgate loan programs to low and moderate-income borrowers, buyers with an interest in renovating a home within a particular part of the city, and other groups as defined by each finance agency. With the help of this type of agency, you probably will be given an interest rate that is below market, down payment help and other benefits. These types of agencies may help eligible buyers with a lower interest rate, help with your down payment, and provide other assistance. The principal goal of non-profit housing finance agencies is promoting home ownership in certain parts of the city.

Find out about low-down and no-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low to moderate-income Americans get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, making the buyers eligible for a mortgage loan. Down payment requirements for FHA mortgages are smaller than those for traditional mortgage loans, although these mortgages hold current rates of interest. Closing costs may be covered by the mortgage, and the down payment can be as low as 3 percent of the purchase price.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a reasonable interest rate, no down payment, and reduced closing costs. Even though the mortgage loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment with a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the home's amount, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of needing to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a piece of his own equity to help you get your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Often, this kind of second mortgage has higher interest.

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

Want to discuss the best options for down payments? Call us: 425-508-9988.

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