Building Your Down Payment

Many buyers qualify for various loan programs, but they don't have a large sum of cash to put up the standard down payment. Do you want to buy a new house, but don't know how to put together your down payment?

Tighten your belt and save. Look for ways to reduce your expenditures to put away money for a down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your vacation.

Work more and sell things you do not need. Perhaps you can find an additional job and save your earnings. You can also get creative about the things you could be able to put up for sale. A closetful of small things may add up to a nice sum at a garage or tag sale. You could also look into what your investments could sell for.

Tap into your retirement funds. Explore the details of your individual plan. Many homebuyers get down payment money from withdrawing what they need from their IRAs or pulling money out of 401(k) programs. Be sure to learn about the tax ramifications, your obligation for repaying the money, and possible early withdrawal penalties.

Ask for assistance from members of your family. First-time homebuyers are sometimes lucky enough to get down payment help from giving family members who are willing to help get them in their first home. Your family members may be willing to help you reach the milestone of buying your first home.

Contact housing finance agencies. These types of agencies provide special mortgate loan programs- for low and moderate-income buyers, buyers interested in sprucing up a residence within a specific part of the city, and additional groups as specified by the finance agency. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other advantages. These types of agencies may assist you with a lower interest rate, get you your down payment, and offer other assistance. The main goal of non-profit housing finance agencies is build up the purchase of homes in particular parts of the city.

Explore no-down and low-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 an important role in helping low to moderate-income individuals 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 provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a loan. Interest rates with an FHA loan typically feature the current interest rate, while the down payment with an FHA mortgage are smaller than those of conventional loans. Closing costs might be included in the mortgage, while the down payment can be as low as 3 percent of the purchase price.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can qualify for a VA loan, which generally offers a reasonable fixed interest rate, no down payment, and minimal closing costs. Even though the mortgages don't originate from the VA, the department verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You can fund a down payment using a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, rather than needing to put together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you part of his own equity to help you get your down payment funds. In this scenario, you would borrow the majority of the purchase price from a traditional lender and finance the remaining amount with the seller. Often, this form of second mortgage will have a higher rate of interest.

Need to talk about your down payment? Give us a call at 805-636-9222.