Putting Together Your Down Payment

Lots of buyers can qualify for various loan programs, but they don't have a lot of money to put up a down payment. Here are a few ideas:

Cut expenses and save. Scrutinize your budget to discover extra money to save for your down payment. There are bank programs in which some of your take-home pay is automatically placed into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay local for your annual vacation.

Work more and sell things you don't need. Try to get a second job. This can be rough, but the temporary trial can provide your down payment money. You can also get creative about the items you may be able to put up for sale. Multiple small things could add up to a nice sum at a garage or tag sale. You can also research what any investments you own may bring if sold.

Borrow from your retirement funds. Explore the details of your particular plan. You may borrow money from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Be sure to ask your plan representative about the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for a gift from your family. Many buyers somtimes get help with their down payment assistance from caring family members who may be anxious to help get them in their first home. Your family members may be pleased at the chance to help you reach the milestone of buying your own home.

Learn about housing finance agencies. These agencies provide special loan programs for low and moderate-income buyers, buyers interested in sprucing up a home within a specific part of the city, and other particular types of buyers as defined by the agency. Financing with a housing finance agency, you may be given a below market interest rate, down payment assistance and other perks. Housing finance agencies can help you with a reduced interest rate, get you your down payment, and offer other assistance. These non-profit programs exist to promote home ownership in specific places.

Learn about low-down and no-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 helping low to moderate-income families get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting home financing. FHA provides mortgage insurance to the private lenders, enabling new homebuyers who may not qualify for a traditional mortgage loan, to get financing. Interest rates for an FHA mortgage are normally the market interest rate, while the down payment requirements with an FHA mortgage will be lower than those of conventional loans. The required down payment can be as low as three percent while the closing costs might be included in the mortgage loan.

• VA mortgage loans

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

• Piggy-back loans

  You can fund your down payment through a second mortgage that closes with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you a piece of his home equity to assist you with your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and borrow the remainder from the seller. Usually you will pay a slightly higher interest rate on the loan from the seller.

No matter your method of putting together your down payment, the thrill of owning your own home will be just as sweet!

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