Your Down Payment

Lots of buyers can qualify for a mortgage loan, but they don't have much to pay a down payment. Want to buy a new house, but don't know how to put together a down payment?

Tighten your belt and save. Scrutinize the budget to find extra money to save for your down payment. You also might enroll in an automatic savings plan at your bank to automatically have a predetermined portion of your take-home pay moved into your savings account. Some practical approaches to build up funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Work more and sell items you do not need. Look for a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you may be able to sell. You might have desirable items you can sell on an auction website, or household items for a garage or tag sale. You might also look into what your investments could bring if sold.

Borrow from retirement funds. Research the specifics for your particular plan. You may pull out money from a 401(k) for a down payment or get a withdrawal from an IRA. Be sure to find out about the tax consequences, your obligation for repaying funds, and early withdrawal penalties.

Ask for a gift from your family. Many buyers somtimes receive help with their down payment help from thoughtful parents and other family members who are prepared to help get them in their own home. Your family members may be eager to help you reach the goal of having your first home.

Learn about housing finance agencies. These agencies provide provisional mortgage programs for low and moderate-income borrowers, buyers with an interest in rehabilitating a residence within a targeted part of the city, and other groups as specified by each finance agency. Working with this type of agency, you may be given a below market interest rate, down payment help and other perks. Housing finance agencies may assist you with a lower interest rate, help with your down payment, and offer other advantages. The primary purpose of not-for-profit housing finance agencies is to boost residence ownership in targeted places.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low and moderate-income Americans get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who may not be eligible for a typical mortgage by themselves, by providing mortgage insurance to lenders. Down payment sums for FHA mortgages are below those of typical mortgage loans, although these mortgages come with average rates of interest. Closing costs may be financed in the mortgage, and the down payment can be as low as 3 percent of the total.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a reasonable interest rate, no down payment, and minimal closing costs. Although the VA doesn't actually finance the loans, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes with the first. Generally the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Instead of the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you a portion of his own equity to help you with your down payment money. The buyer finances the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this form of second mortgage will have a higher rate of interest.

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

Want to discuss down payment options? Give us a call: 719-357-6601.

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