Your Down Payment

Many buyers qualify for a loan, but they don't have a lot of cash to pay a down payment. Do you want to look into getting a new house, but don't know how you should get together a down payment?

Slash the budget and build up savings. Turn your budget inside out to uncover ways you can cut expenses to save for your down payment. There are bank programs through which a specific portion of your take-home pay is automatically deposited into a savings account each pay period. Some practical ways to save additional funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Sell items you do not really need and find a second job. Perhaps you can find a second job and save your earnings. You can also get serious about the possessions you really need and the things you can sell. Multiple small items can add up to a fair amount at a garage or tag sale. You could also explore what your investments will sell for.

Borrow money from your retirement plan. Check the parameters of your particular plan. It is possible to borrow money from a 401(k) for you down payment or make a withdrawal from an Individual Retirement Account. Make sure you understand the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for a gift from your family. First-time buyers are sometimes lucky enough to receive down payment assistance from giving family members who may be able to help get them in their first home. Your family members may be inclined to help you reach the milestone of having your own home.

Research housing finance agencies. Special mortgage loans are offered to homebuyers in specific situations, like low income buyers or future homeowners planning to remodel homes in a certain neighborhood, among others. With the help of a housing finance agency, you may receive a below market interest rate, down payment assistance and other incentives. These kinds of agencies can assist eligible buyers with a reduced interest rate, get you your down payment, and offer other advantages. The principal goal of non-profit housing finance agencies is to boost the purchase of homes in specific areas.

Learn about low-down and no-down mortgage loan programs.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low and moderate-income individuals qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for mortgages. FHA provides mortgage insurance to the private lenders, enabling buyers who may not qualify for a conventional mortgage loan, to receive a mortgage. Interest rates for an FHA mortgage are normally the current interest rate, but the down payment amounts for an FHA mortgage will be lower than those of conventional loans. Closing costs might be covered by the mortgage, and the down payment can be as low as 3 percent of the purchase price.

  • VA mortgages

    With a guarantee from 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 reduced closing costs, and provides the benefit of a competitive interest rate. Even though the mortgages don't originate from the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Generally the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    We a seller carries back a second mortgage, the seller loans you part of his or her equity. You would finance the majority of the purchase price with a traditional mortgage lending institution and borrow the remainder from the seller. Typically, this form of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter which strategy you use to come up with your down payment. Your new home will be your reward!

Want to discuss the best options for down payments? Call us: 562 320-0510.

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