Putting Together Your Down Payment

Many people who are looking to purchase a new home qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new house, but aren't sure how to get together your down payment?

Slash your budget and build up savings. Turn your budget upside-down to find extra money to save for your down payment. There are bank programs in which a specific portion of your paycheck is automatically deposited into a savings account every pay period. You would be wise to look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.

Work a second job and sell items you do not need. Maybe you can get an additional job and build up your earnings. You can also seriously consider the possessions you actually need and the items you could be able to sell. You may have desirable items you can sell on an online auction, or quality household items for a tag or garage sale. You can also explore what any investments you have could bring if sold.

Borrow money from a retirement plan. Research the details for your individual plan. It is possible to pull out funds from a 401(k) for you down payment or withdraw from an IRA. Make sure to find out about the tax consequences, your obligation for repaying the money, and penalties for withdrawing early.

Request a generous gift from family. Many buyers are sometimes lucky enough to get help with their down payment assistance from gracious parents and other family members who are prepared to help them get into their first home. Your family members may be inclined to help you reach the milestone of buying your first home.

Learn about housing finance agencies. These agencies provide special loan programs for low and moderate-income borrowers, buyers with an interest in renovating a house in a targeted part of the city, and other certain kinds of buyers as defined by the agency. Working with a housing finance agency, you may receive an interest rate that is below market, down payment assistance and other perks. These types of agencies can assist you with a reduced rate of interest, help with your down payment, and provide other assistance. The central mission of non-profit housing finance agencies is to boost home ownership in particular places.

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

  • 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 assisting low and moderate-income Americans get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages. FHA aids first-time homebuyers and others who might not be eligible for a traditional mortgage by themselves, by offering mortgage insurance to the lenders. Down payment sums for FHA loans are less than those with traditional mortgages, even though these mortgages come with average interest rates. The required down payment may be as low as 3 percent while the closing costs could be covered by the mortgage.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a low interest rate, no down payment, and limited closing costs. While the VA doesn't actually finance the 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. Often the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home 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'll pay a somewhat higher interest rate with the loan financed by the seller.

The satisfaction will be the same, no matter how you manage to put together the down payment. Your brand new home will be your reward!

Want to discuss down payment options? Call us: 7193576601.

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