Building Your Down Payment

Lots of people who would like to buy a new home qualify for several different kinds of mortgages, but they don't have much to pay the standard down payment. Here are a few ways to put together a down payment

Slash your budget and build up savings. Turn your budget upside-down to uncover ways you can cut expenses to go toward your down payment. There are bank programs through which some of your take-home pay is automatically placed into a savings account every pay period. Some practical approaches to build up funds include moving into a residence that is less expensive, and skipping a year's vacation.

Sell items you do not need and find a second job. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can make an exhaustive list of things you can sell. Unworn gold jewelry can bring a good price from local jewelry stores. Maybe you have desirable items you can put up for sale on an auction website, or quality household items for a tag or garage sale. Also, you might want to look into selling any investments you hold.

Borrow from your retirement funds. Research the details of your individual plan. It is possible to borrow funds from a 401(k) for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you understand about any penalties, the effect this will have on your income taxes, and repayment obligation.

Ask for assistance from generous family members. Many buyers are sometimes lucky enough to get help with their down payment help from gracious parents and other family members who may be anxious to help them get into their own home. Your family members may be willing to help you reach the milestone of having your first home.

Contact housing finance agencies. These agencies provide special loan programs for low and moderate-income homebuyers, buyers interested in remodeling a residence within a specific area, and additional groups as defined by the finance agency. With the help of a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies may help eligible homebuyers with a lower interest rate, get you your down payment, and provide other advantages. The central goal of not-for-profit housing finance agencies is boosting the purchase of homes in targeted places.

Learn about low-down and no-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low and moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be able to qualify for a traditional loan on their own, by providing mortgage insurance to private lenders. Interest rates with an FHA loan are typically the current interest rate, while the down payment with an FHA mortgage are less than those of conventional loans. Closing costs might be financed in the mortgage, and the down payment could be as low as 3% of the total.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. Even though the loans are not actually financed by the VA, the office certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You can fund your down payment through a second mortgage that closes at the same time as the first. Most of the time, the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of having to put 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 borrow the largest portion of the purchase price from a traditional lender and finance the remaining amount with the seller. Usually this form of second mortgage has a higher rate of interest.

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

Need to talk about down payments? Give us a call at 866-300-1550.