Putting Together Your Down Payment

Lots of borrowers 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 to get together a down payment?

Slash your budget and build up savings. Look for ways to reduce your monthly expenditures to save toward a down payment. There are bank programs in which a specific portion of your take-home pay is automatically transferred into savings every pay period. You might look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay close to home for your family vacation.

Work a second job and sell things you don't need. Maybe you can find a second job and save your earnings. You can also seriously consider the possessions you really need and the items you can sell. Multiple small things may add up to a fair amount at a garage or tag sale. You might also explore what any investments you hold could bring if sold.

Borrow money from your retirement plan. Explore the specifics of your particular plan. Many people get down payment money by withdrawing funds from their Individual Retirement Accounts or taking money out of 401(k) programs. Be sure you know about any penalties, the way this may affect on your taxes, and repayment obligation.

Ask for assistance from members of your family. First-time buyers somtimes receive down payment help from giving parents and other family members who may be able to help them get into their own home. Your family members may be willing to help you reach the goal of owning your first home.

Learn about housing finance agencies. Special mortgate loan programs are given to homebuyers in certain circumstances, such as low income homebuyers or homebuyers planning to renovating homes in a specific neighborhood, among others. Financing through a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies may assist you with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit agencies exist to build up community in specific places.

Learn about low-down and no-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get home financing. FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a home loan. Interest rates with an FHA mortgage normally feature the market interest rate, but the down payment amounts with an FHA loan will be lower than those of conventional loans. The required down payment can go as low as three percent and the closing costs could be covered by the mortgage loan.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has limited closing costs, and offers a competitive rate of interest. Although the loans are not actually issued by the VA, the department verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment using a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, while the first mortgage covers 80 percent. Rather than the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her equity. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually this form of second mortgage has higher interest.

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

Want to discuss your down payment? Call us: 714-970-9700.

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