Building Your Down Payment

Many borrowers can easily qualify for several different kinds of mortgages, but they don't have a lot of money to pay the standard down payment. Do you want to buy a new home, but aren't sure how to put together a down payment?

Cut expenses and save. Look for ways to trim your expenses to save toward a down payment. There are bank programs through which a portion of your take-home pay is automatically placed into savings every pay period. Some practical ways to build up funds include moving into less expensive housing, and skipping a year's vacation.

Work more and sell items you don't need. Try to find an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get serious about the possessions you really need and the things you migh be able to put up for sale. A closetful of small things may add up to a fair amount at a garage or tag sale. You could also look into what any investments you own could bring if sold.

Borrow your down payment from a retirement plan. Research the details for your individual plan. It is possible to take out money from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Be sure you know about any penalties, the way this may affect on your income taxes, and repayment obligation.

Request a gift from your family. Many buyers somtimes get help with their down payment help from gracious family members who may be willing to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of buying your own home.

Contact housing finance agencies. Provisional mortgage loans are provided to homebuyers in specific situations, like low income homebuyers or buyers planning to remodel homes in a specific part of town, among others. With the help of a housing finance agency, you can be given an interest rate that is below market, down payment assistance and other incentives. These types of agencies can assist you with a lower rate of interest, help with your down payment, and offer other assistance. The central mission of not-for-profit housing finance agencies is build up the purchase of homes in targeted parts of the city.

Find out about low-down and no-down mortgages.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in helping low to moderate-income individuals qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to qualify for mortgage loans. FHA aids first-time homebuyers and others who may not be eligible for a conventional mortgage loan by themselves, by providing mortgage insurance to the lenders. Interest rates for an FHA loan typically feature the market interest rate, while the down payment amounts for an FHA mortgage are below those of conventional loans. Closing costs may be included in the mortgage, and your down payment can be as low as 3% of the purchase price.

• VA mortgage loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a low interest rate, no down payment, and limited closing costs. Even though the VA doesn't finance the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  You can fund your down payment with a second mortgage that closes at the same time as the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the homebuyer just has to cover 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 home equity. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Generally, this kind of second mortgage will have a higher rate of interest.

No matter how you gather your down payment, the satisfaction of living in your own home will be just as great!

Want to discuss down payment options? Give us a call:  949-200-3800