Putting Together Your Down Payment

Lots of people who would like to buy a new house qualify for various loan programs, but they don't have a large sum of cash to pay a down payment. Here are a few ways to put together your down payment

Slash your budget and build up savings. Scrutinize the budget to uncover ways you can cut expenses to go toward your down payment. Also, you can look into bank programs in which some of your take-home pay is automatically placed into savings every pay period. Some effective approaches to save additional funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Work more and sell things you don't need. Maybe you can get a second job to get your down payment money. You can also get creative about the items you migh be able to sell. A closetful of small items can add up to a nice sum at a garage or tag sale. You could also look into what your investments could sell for.

Tap into your retirement funds. Investigate the provisions of your retirement plan. You may pull out funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure to learn about the tax ramifications, repayment terms, and possible penalties for withdrawing early.

Request a generous gift from your family. Many homebuyers somtimes receive help with their down payment help from gracious parents and other family members who are able to help get them in their first home. Your family members may be willing to help you reach the milestone of owning your own home.

Contact housing finance agencies. Special mortgage loans are given to homebuyers in certain situations, such as low income homebuyers or buyers looking to improve houses in a particular neighborhood, among others. With the help of a housing finance agency, you can receive a below market interest rate, down payment help and other benefits. These types of agencies may help eligible buyers with a lower rate of interest, get you your down payment, and offer other advantages. The main goal of not-for-profit housing finance agencies is boosting the purchase of homes in specific areas.

Research no-down and low-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 critical part in aiding low to moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, making the buyers eligible for a mortgage loan. Down payment amounts for FHA mortgages are less than those for typical mortgages, although these mortgages hold average rates of interest. Closing costs may be included in the mortgage, while the down payment could be as low as 3% of the total amount.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive interest rate. While it's true that the mortgage loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than having to put together the typical 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the seller loans you part of his or her equity. The buyer finances the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a slightly higher interest rate on the loan from the seller.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your new home will be worth it!

Need to talk about the best options for down payments? Give us a call at 719-357-6601.

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