Your Down Payment

Lots of buyers can easily qualify for a loan, but they don't have much to put up a down payment. Do you want to buy a new home, but don't know how you should put together a down payment?

Tighten your belt and save. Look for ways to trim your monthly expenditures to put away money for a down payment. You also could enroll in an automatic savings plan at your bank to automatically have a predetermined portion of your take-home pay deposited into your savings account. Some effective strategies to put together funds include moving into less expensive housing, and staying home for your vacation this year.

Work a second job and sell items you don't need. Maybe you can find a second job and build up your earnings. You can also get serious about the possessions you actually need and the items you migh be able to put up for sale. You may have desirable items you can sell on an auction website, or quality household items for a garage or tag sale. Also, you can look into selling any investments you own.

Borrow from your retirement funds. Check the provisions of your particular program. It is possible to pull out funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Be sure you understand the tax ramifications, your obligation for repaying funds, and any penalties for withdrawing early.

Ask for a gift from your family. Many buyers are often lucky enough to get help with their down payment help from thoughtful family members who may be anxious to help get them in their first home. Your family members may be pleased to help you reach the milestone of having your first home.

Learn about housing finance agencies. These agencies offer special mortgage programs for moderate and low income homebuyers, buyers with an interest in rehabilitating a house in a targeted part of the city, and other particular kinds of buyers as defined by each agency. Working with a housing finance agency, you can receive an interest rate that is below market, down payment help and other incentives. Housing finance agencies may help eligible homebuyers with a reduced interest rate, help with your down payment, and provide other advantages. These non-profit programs exist to promote home ownership in particular places.

Learn about low-down and no-down mortgage loans.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low to moderate-income individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans. FHA assists first-time buyers and others who may not be eligible for a conventional mortgage loan by themselves, by providing mortgage insurance to the lenders. Down payment totals for FHA loans are less than those for typical mortgages, although these mortgages hold average rates of interest. The down payment may go as low as three percent while the closing costs may be included in the mortgage loan.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has limited closing costs, and provides the advantage of a competitive interest rate. While the VA does not actually finance the loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Usually the piggyback loan is for 10 percent of the purchase price, while the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you some of his own equity to help you with your down payment funds. You would borrow the majority of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Typically, this kind of second mortgage will have higher interest.

The satisfaction will be the same, no matter how you manage to come up with your down payment. Your brand new home will be well worth it!

Need to talk about down payments? Give us a call at 714-970-9700.

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