Putting Together Your Down Payment

Lots of folks who would like to buy a new house can qualify for various loan programs, but they don't have a lot of money to put up a down payment. Want to look into getting a new home, but aren't sure how you should get together your down payment?

Tighten your belt and save. Be on the look-out for ways to trim your monthly expenses to set aside money for a down payment. Also, you can look into bank programs through which a specific portion of your take-home pay is automatically transferred into a savings account each pay period. You might look into some big expenses in your spending history that you can live without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a family vacation.

Work more and sell items you don't need. Try to find a second job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can make an exhaustive list of things you can sell. Broken gold jewelry can be sold at local jewelry stores. A closetful of small items could add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you own.

Borrow money from your retirement plan. Investigate the parameters of your specific plan. Many people get down payment money from withdrawing from their Individual Retirement Accounts or pulling money out of 401(k) programs. Make sure you understand about any penalties, the effect this could have on taxes, and repayment obligation.

Ask for a generous gift from your family. Many homebuyers somtimes get help with their down payment help from thoughtful family members who may be willing to help get them in their own home. Your family members may be eager to help you reach the goal of having your own home.

Learn about housing finance agencies. Provisional mortgate loan programs are offered to homebuyers in certain situations, like low income buyers or buyers looking to remodel houses in a particular part of town, among others. With the help of a housing finance agency, you can be given an interest rate that is below market, down payment help and other benefits. These types of agencies can assist you with a reduced interest rate, get you your down payment, and offer other assistance. The main goal of non-profit housing finance agencies is boosting the purchase of homes in certain places.

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

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income individuals qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling homebuyers who will not qualify for a conventional loan, to get home financing. Interest rates with an FHA mortgage usually feature the going interest rate, while the down payment for an FHA mortgage will be lower than those of conventional loans. Closing costs can be covered by the mortgage, and the down payment might be as low as 3% of the purchase price.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a low fixed interest rate, no down payment, and limited closing costs. Even though the loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Most of the time, the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remaining amount with the seller. Usually you'll pay a somewhat higher interest rate with the loan financed by the seller.

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

Need to talk about the best options for down payments? Give us a call: 253-848-1255.

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