Your Down Payment

Many buyers qualify for various loan programs, but they don't have a lot of money to put up a down payment. Do you want to buy a new home, but aren't sure how you should put together your down payment?

Slash the budget and build up savings. Scrutinize the budget to discover extra money to go toward your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically deposited into a savings account each pay period. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your annual vacation.

Sell things you don't need and find a part-time job. Perhaps you can get an additional job to get your down payment money. You can also get creative about the things you may be able to put up for sale. You may have collectibles you can sell at an online auction, or quality household items for a garage or tag sale. You could also look into what any investments you own could sell for.

Tap into retirement funds. Explore the details for your particular plan. You may borrow money from a 401(k) for a down payment or make a withdrawal from an Individual Retirement Account. You will need to ensure you understand about any penalties, the way this will affect on your income taxes, and repayment obligation.

Ask for a gift from your family. Many buyers somtimes get down payment assistance from giving family members who may be eager to help get them in their own home. Your family members may be willing to help you reach the goal of buying your own home.

Learn about housing finance agencies. Special mortgage loans are given to buyers in specific circumstances, like low income homebuyers or people looking to remodel homes in a targeted area, among others. Financing through this type of agency, you probably will get an interest rate that is below market, down payment help and other perks. These types of agencies can help you with a lower interest rate, get you your down payment, and offer other advantages. The central mission of not-for-profit housing finance agencies is to promote the purchase of homes in specific places.

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

  • 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 an important role in helping low to moderate-income families 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 offers mortgage insurance to the private lenders, enabling buyers who may not qualify for a traditional loan, to obtain home financing. Interest rates for an FHA loan are normally the current interest rate, but the down payment for an FHA loan are lower than those of conventional loans. Closing costs may be financed within the mortgage, and the down payment might be as low as 3% of the total.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan does not require a down payment, has limited closing costs, and provides the benefit of a competitive interest rate. Although the mortgages are not actually provided by the VA, the office verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Generally the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Instead of the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Generally, this form of second mortgage has a higher rate of interest.

No matter your strategy of putting together your down payment, the thrill of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payment options? Call us: 719-357-6601.

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