Building Your Down Payment

Many buyers qualify for various loan programs, but they can't afford a large down payment. Here are a few methods that will help you get together a down payment

Slash your budget and build up savings. Turn your budget upside-down to uncover extra money to save for your down payment. You also could enroll in an automatic savings plan to automatically have a specific amount from your take-home pay deposited into savings. You would be wise to 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 might move into less expensive housing, or skip a vacation.

Work a second job and sell items you don't need. Try to find an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can make an exhaustive inventory of things you may be able to sell. Unworn gold jewelry can bring a good price from local jewelers. Multiple small things might add up to a fair amount at a garage or tag sale. You could also look into what your investments will bring if sold.

Borrow from retirement funds. Investigate the provisions of your retirement plan. It is possible to borrow funds from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure you know about any penalties, the way this could affect on taxes, and repayment obligation.

Request a generous gift from family. Many homebuyers are sometimes lucky enough to get down payment help from gracious family members who are eager to help get them in their first home. Your family members may be eager to help you reach the goal of owning your own home.

Research housing finance agencies. Provisional loan programs are provided to homebuyers in certain circumstances, such as low income purchasers or homebuyers looking to renovating homes in a certain neighborhood, among others. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment help and other incentives. Housing finance agencies may help you with a lower rate of interest, get you your down payment, and offer other benefits. These non-profit agencies to promote home ownership in particular areas.

Research no-down and low-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income Americans qualify for mortgages. 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, ensuring the buyers are eligible for a mortgage. Interest rates for an FHA mortgage usually feature the going interest rate, while the down payment requirements for an FHA mortgage will be smaller than those of conventional loans. Closing costs may be financed in the mortgage, while the down payment may be as low as 3% of the total amount.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. Although the mortgage loans don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer 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 part of his home equity to assist you with your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Often, this type of second mortgage will have a higher rate of interest.

The feeling of accomplishment will be the same, no matter which method you use to come up with your down payment. Your brand new home will be well worth it!

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

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