Building Your Down Payment

Many borrowers qualify for various loan programs, but they can't afford a large down payment. Get started here

Cut expenses and save. Turn your budget upside-down to discover extra money to save for your down payment. Also, you can look into bank programs through which some of your paycheck is automatically placed into savings each pay period. Some practical ways to put together funds include moving into less expensive housing, and staying home for your vacation for a year or two.

Sell items you don't really need and find a part-time job. Try to get an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you actually need and the items you can sell. Multiple small items might add up to a fair amount at a garage or tag sale. You could also research what any investments you hold will sell for.

Tap into retirement funds. Research the details of your particular plan. It is possible to borrow money from a 401(k) for a down payment or withdraw from an IRA. Be sure you understand the tax ramifications, repayment terms, and possible early withdrawal penalties.

Request a generous gift from family. First-time homebuyers are often lucky enough to receive help with their down payment help from caring family members who are prepared to help them get into their first home. Your family members may be happy at the chance to help you reach the goal of having your first home.

Learn about housing finance agencies. These types of agencies offer provisional mortgage loans for low and moderate-income borrowers, buyers with an interest in remodeling a house within a specific part of the city, and other groups as defined by the finance agency. With the help of this type of agency, you can get a below market interest rate, down payment assistance and other incentives. Housing finance agencies may help you with a reduced interest rate, get you your down payment, and provide other advantages. These non-profit agencies to build up community in certain neighborhoods.

Learn about low-down and no-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income Americans qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get home financing. FHA aids first-time buyers and others who might not be able to qualify for a traditional loan by themselves, by providing mortgage insurance to the private lenders. Interest rates for an FHA mortgage are typically the going interest rate, while the down payment amounts with an FHA loan will be lower than those of conventional loans. Closing costs can be financed in the mortgage, and your down payment could be as low as 3 percent of the total amount.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. Although the VA doesn't issue the loans, it does issue a certificate of eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. In contrast to the traditional 20 percent down payment, the buyer just has to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you some of his home equity to help you get your down payment funds. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically, this kind of second mortgage will have higher interest.

No matter how you gather your down payment, the satisfaction of reaching the goal of owning your own home will be just as sweet!

Want to discuss down payment options? Call us at 9094671090.