Building Your Down Payment

Lots of buyers can qualify for several different kinds of mortgages, but they don't have a lot of money to pay the standard down payment. Want to buy a new home, but aren't sure how you should put together a down payment?

Cut expenses and save. Be on the look-out for ways you can reduce your expenditures to put away money for a down payment. There are bank programs through which some of your take-home pay is automatically deposited into a savings account each pay period. Some practical ways to put together funds include moving into a residence that is less expensive, and staying local for your family vacation this year.

Work a second job and sell items you do not need. Look for a second job. This can be exhausting, but the temporary trial can provide your down payment money. You can also seriously consider the possessions you really need and the items you can put up for sale. A closetful of small items could add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow from retirement funds. Explore the specifics of your particular plan. Some people get down payment money by withdrawing funds from IRAs or borrowing from 401(k) plans. Make sure to ask your plan representative about the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for a gift from your family. First-time homebuyers somtimes get down payment help from giving parents and other family members who are prepared to help get them in their own home. Your family members may be pleased to help you reach the goal of having your own home.

Learn about housing finance agencies. These types of agencies extend provisional mortgate loan programs to low and moderate-income borrowers, buyers interested in renovating a house in a targeted part of the city, and other specific kinds of buyers as specified by the agency. Financing with this kind of agency, you probably will get an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies may assist eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other advantages. The primary mission of not-for-profit housing finance agencies is to boost the purchase of homes in targeted areas.

Learn about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income Americans get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get mortgage loans. FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a home loan. Interest rates for an FHA mortgage usually feature the current interest rate, but the down payment for an FHA loan will be smaller than those of conventional loans. The down payment can be as low as three percent while the closing costs might be covered by the mortgage loan.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. Although the VA doesn't actually issue the mortgage loans, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Usually you'll pay a slightly higher interest rate on the loan from the seller.

Want to discuss down payments? Call us at 866-300-1550.