Putting Together Your Down Payment

Many buyers qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new house, but aren't sure how you should get together a down payment?

Reduce expenses and save. Look for ways you can reduce your monthly expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan to automatically have a set amount from your take-home pay moved into savings. You could 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 stay close to home for your annual vacation.

Work more and sell things you do not need. Maybe you can get an additional job and build up your earnings. You can also get creative about the things you may be able to sell. Maybe you have desirable items you can sell at an auction website, or household goods for a tag or garage sale. Also, you can consider selling any investments you own.

Borrow money from a retirement plan. Research the specifics for your particular plan. Some homebuyers get down payment money by withdrawing funds from IRAs or borrowing from 401(k) plans. Be sure you know about any penalties, the way this could affect on taxes, and repayment obligation.

Ask for a gift from your family. First-time homebuyers are sometimes lucky enough to receive down payment help from giving parents and other family members who are willing to help them get into their own home. Your family members may be pleased at the chance to help you reach the milestone of buying your first home.

Contact housing finance agencies. These types of agencies offer provisional mortgate loan programs to low and moderate-income borrowers, buyers with an interest in sprucing up a house in a particular part of the city, and additional certain types of buyers as specified by the finance agency. Financing through this type of agency, you probably will receive an interest rate that is below market, down payment help and other advantages. Housing finance agencies may assist eligible buyers with a lower interest rate, get you your down payment, and offer other benefits. These non-profit programs were established to build up community in particular places.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income families qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages. FHA offers mortgage insurance to private lenders, enabling homebuyers who will not be eligible for a traditional mortgage loan, to receive financing. Down payment sums for FHA loans are less than those of conventional mortgage loans, even though these loans have average rates of interest. Closing costs might be included in the mortgage, and the down payment may be as low as 3% of the purchase price.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a competitive fixed interest rate, no down payment, and minimal closing costs. Although the VA does not actually finance the mortgages, 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. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The borrower covers the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer funds the majority of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a slightly higher rate on the loan from the seller.

The feeling of accomplishment will be the same, no matter how you manage to pull together the down payment. Your brand new home will be worth it!

Need to talk about your down payment? Call us at 562 320-0510.

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