Building Your Down Payment

Many buyers qualify for various loan programs, but they don't have much to pay the standard down payment. Here's where you start

Slash your budget and build up savings. Look for ways to trim your monthly expenditures to set aside funds for a down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a specific amount from your paycheck transferred into your savings account. You could look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your family 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 get creative about the items you could be able to sell. Multiple small items might add up to a fair amount at a garage or tag sale. You could also explore what any investments you hold will bring if sold.

Borrow from retirement funds. Research the details of your individual plan. Many people get down payment money by withdrawing from Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure to find out about the tax consequences, repayment terms, and possible penalties for withdrawing early.

Request a gift from family. First-time homebuyers are often lucky enough to get down payment help from giving family members who are eager to help get them in their first home. Your family members may be inclined to help you reach the milestone of owning your own home.

Research housing finance agencies. Provisional loan programs are extended to buyers in certain circumstances, like low income buyers or people planning to renovating homes in a targeted place, among others. Working with this kind of agency, you can get an interest rate that is below market, down payment assistance and other perks. These kinds of agencies may assist eligible buyers with a lower interest rate, get you your down payment, and offer other benefits. The main goal of non-profit housing finance agencies is promoting the purchase of homes in targeted areas.

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

  • FHA mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in helping low and moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to qualify for mortgages. FHA provides mortgage insurance to private lenders, making the buyers eligible for a mortgage. Down payment amounts for FHA mortgages are lower than those of typical mortgage loans, although these mortgages hold average interest rates. Closing costs might be financed within the mortgage, and your down payment can be as low as 3 percent of the purchase price.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has reduced closing costs, and offers a competitive interest rate. Even though the VA doesn't actually issue the mortgage loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Generally the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers the remaining 10%, instead of having to put together the typical 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remainder with the seller. Usually you'll pay a slightly higher interest rate on the loan financed by the seller.

The feeling of accomplishment will be the same, no matter which approach you use to get together the down payment. Your new home will be worth it!

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

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