Putting Together Your Down Payment

Lots of borrowers can qualify for a loan, but they don't have a lot of money to pay a down payment. Do you want to look into getting a new home, but don't know how you should get together a down payment?

Cut expenses and save. Look for ways to reduce your expenditures to set aside money for a down payment. You also might enroll in an automatic savings plan to have a portion of your payroll automatically deposited into a savings account. Some effective methods to build up funds include moving into a residence that is less expensive, and skipping your vacation for a year or two.

Sell things you don't really need and find a second job. Try to get a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the items you could be able to sell. A closetful of small items may add up to a fair amount at a garage or tag sale. You could also look into what any investments you hold could bring if sold.

Borrow from retirement funds. Investigate the parameters of your particular program. Many homebuyers get down payment money by withdrawing funds from Individual Retirement Accounts or borrowing from their 401(k) programs. Be sure to learn about the tax ramifications, repayment terms, and any penalties for withdrawing early.

Ask for help from generous family members. Many homebuyers are sometimes lucky enough to get help with their down payment help from giving family members who may be anxious to help get them in their own home. Your family members may be eager to help you reach the goal of buying your own home.

Contact housing finance agencies. These agencies provide provisional mortgage loans for moderate and low income buyers, buyers with an interest in remodeling a home within a specific area, and other particular kinds of buyers as specified by the agency. Working through a housing finance agency, you can be given a below market interest rate, down payment assistance and other advantages. Housing finance agencies may help eligible homebuyers with a lower rate of interest, help with your down payment, and provide other benefits. The primary mission of non-profit housing finance agencies is promoting home ownership in particular areas.

Explore no-down and low-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income individuals get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to qualify for mortgages. FHA offers mortgage insurance to private lenders, enabling new homebuyers who might not be eligible for a conventional mortgage, to get home financing. Down payment amounts for FHA mortgages are below those of typical mortgages, even though these mortgages come with average rates of interest. The required down payment may go as low as 3 percent while the closing costs can be financed in the mortgage loan.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a low rate of interest, no down payment, and limited closing costs. While the loans don't originate from the VA, the office certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You can fund your down payment using a second mortgage that closes along with the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. In contrast to the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lender and finance the remaining amount with the seller. Generally, this type of second mortgage has a higher rate of interest.

No matter how you gather your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!

Need to talk about your down payment? Give us a call at 719-357-6601.

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