Building Your Down Payment

Many borrowers qualify for a loan, but they don't have a large sum of cash to put up a down payment. Get started here

Tighten your belt and save. Scrutinize your budget to find ways you can cut expenses to save for your down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a predetermined portion of your paycheck deposited into your savings account. Some practical ways to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.

Sell things you don't really need and find a second job. Maybe you can get an additional job to get your down payment money. You can also seriously consider the possessions you really need and the items you can put up for sale. Multiple small items may add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from retirement funds. Check the provisions of your retirement program. You can take out funds from a 401(k) plan for a down payment or withdraw from an IRA. Be sure you are knowledgable about any penalties, the way this may affect on your taxes, and repayment obligation.

Ask for a generous gift from your family. Many buyers are often fortunate enough to get down payment assistance from thoughtful family members who may be able to help get them in their own home. Your family members may be willing to help you reach the goal of buying your own home.

Contact housing finance agencies. These agencies offer provisional mortgage programs to moderate and low income borrowers, buyers interested in remodeling a home in a targeted area, and other certain types of buyers as defined by the agency. Financing through a housing finance agency, you may be given a below market interest rate, down payment help and other benefits. These kinds of agencies may help eligible buyers with a reduced interest rate, help with your down payment, and provide other benefits. The primary mission of not-for-profit housing finance agencies is to promote residential ownership in specific places.

Research no-down and low-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 critical role in aiding low and moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans. FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a home loan. Down payment sums for FHA mortgages are below those of typical mortgage loans, even though these loans hold current rates of interest. The down payment may be as low as 3 percent while the closing costs could be packaged in the mortgage loan.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. While it's true that the mortgages don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  You can finance a down payment with a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the home's amount, and the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lending institution and borrow the remainder from the seller. Usually you will pay a somewhat higher rate on the loan from the seller.

The satisfaction will be the same, no matter which approach you use to pull together your down payment. Your new home will be your reward!

Need to talk about down payment options? Call us: 7072522700.