Your Down Payment

Many buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. We have a few ideas

Reduce expenses and save. Look for ways to reduce your monthly expenditures to put away money for a down payment. You may also decide to enroll in an automatic savings plan to automatically have a specific portion of your paycheck transferred into savings. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your vacation.

Sell things you do not need and find a second job. Maybe you can get a second job to get your down payment money. You can also get creative about the items you can put up for sale. You might have desirable items you can put up for sale on an auction website, or household goods for a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow funds from your retirement plan. Check the parameters of your retirement plan. It is possible to borrow funds from a 401(k) plan for a down payment or make a withdrawal from an IRA. Be sure you understand the tax ramifications, your obligation for repaying funds, and any early withdrawal penalties.

Request a generous gift from family. Many buyers somtimes get down payment assistance from caring family members who may be able to help get them in their own home. Your family members may be pleased at the chance to help you reach the milestone of owning your first home.

Contact housing finance agencies. Special loan programs are extended to buyers in certain circumstances, like low income purchasers or buyers planning to improve houses in a targeted area, among others. Working through a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other benefits. These types of agencies can help you with a reduced interest rate, get you your down payment, and offer other benefits. These non-profit agencies to promote the value of homes in particular neighborhoods.

Learn 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 an important role in helping low and moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be eligible for a traditional loan by themselves, by offering mortgage insurance to the private lenders. Interest rates for an FHA loan are usually the going interest rate, while the down payment requirements with an FHA loan will be less than those of conventional loans. Closing costs may be covered by the mortgage, while your down payment can be as low as 3% of the total.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which usually offers a reasonable interest rate, no down payment, and limited closing costs. Even though the loans don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to lend you a portion of his own equity to help you get your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remaining amount from the seller. Generally, this kind of second mortgage has a higher rate of interest.

Want to discuss the best options for down payments? Call us at 866-300-1550.