Putting Together Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few ways to put together a down payment

Slash the budget and build up savings. Scrutinize the budget to discover extra money to go toward your down payment. You may also decide to enroll in an automatic savings plan to have a percentage of your payroll automatically moved into savings. Some practical strategies to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Work a second job and sell things you do not need. Look for an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get creative about the things you migh be able to put up for sale. Maybe you have collectibles you can put up for sale on an online auction, or quality household items for a tag or garage sale. You might also research what any investments you own will bring if sold.

Borrow funds from a retirement plan. Investigate the provisions of your specific program. You can take out funds from a 401(k) for you down payment or make a withdrawal from an IRA. Make sure you are knowledgable about any penalties, the effect this could have on your taxes, and repayment obligation.

Request a gift from family. First-time homebuyers somtimes receive help with their down payment assistance from caring parents and other family members who are anxious to help get them in their own home. Your family members may be eager to help you reach the goal of having your first home.

Contact housing finance agencies. These agencies offer provisional loan programs for low and moderate-income borrowers, buyers interested in rehabilitating a house within a specific area, and other groups as defined by the finance agency. With the help of this type of agency, you can get an interest rate that is below market, down payment help and other perks. Housing finance agencies may help you with a lower interest rate, get you your down payment, and provide other assistance. These non-profit agencies were established to promote home ownership in particular neighborhoods.

Learn about low-down and no-down mortgages.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income families get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting home financing. FHA offers mortgage insurance to the private lenders, enabling new homebuyers who might not be eligible for a typical loan, to get home financing. Interest rates with an FHA loan are generally the market interest rate, but the down payment requirements with an FHA loan are less than those of conventional loans. Closing costs can be covered by the mortgage, and the down payment might be as low as 3 percent of the purchase price.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a competitive fixed rate of interest, no down payment, and reduced closing costs. Even though the VA doesn't finance the mortgages, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can finance your down payment using a second mortgage that closes along with the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. In this scenario, you would finance the majority of the purchase price with a traditional lending institution and finance the remainder with the seller. Typically, this type of second mortgage will have a higher rate of interest.

No matter your method of getting together your down payment, the satisfaction of living in your own home will be just as sweet!

Want to discuss down payments? Give us a call: 9722039033.