Building Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have a lot of money to pay a down payment. Here are a few ideas:

Slash the budget and build up savings. Turn your budget inside out to uncover ways you can cut expenses to go toward your down payment. There are bank programs through which a specific portion of your take-home pay is automatically transferred into savings each pay period. Some effective approaches to put together funds include moving into less expensive housing, and skipping a year's vacation.

Sell things you don't really need and get a second job. Look for a second 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 can put up for sale. You may have collectibles you can put up for sale at an auction website, or household items for a garage or tag sale. You might also research what any investments you have will sell for.

Borrow funds from your retirement plan. Explore the details of your particular plan. It is possible to borrow funds from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Be sure to ask your plan representative about the tax consequences, your obligation for repayment, and any early withdrawal penalties.

Ask for a gift from your family. Many homebuyers are sometimes fortunate enough to get help with their down payment assistance from caring family members who may be anxious to help them get into their own home. Your family members may be inclined to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Special mortgate loan programs are offered to homebuyers in certain situations, like low income purchasers or homebuyers looking to renovating houses in a particular neighborhood, among others. Financing through a housing finance agency, you probably will get a below market interest rate, down payment assistance and other incentives. These types of agencies may help you with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit agencies exist to promote community in certain places.

Research no-down and low-down mortgage loan programs.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income buyers get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get mortgage loans. FHA assists first-time homebuyers and others who might not be able to qualify for a traditional mortgage on their own, by providing mortgage insurance to private lenders. Down payment amounts for FHA loans are less than those for traditional mortgages, even though these loans hold average interest rates. The down payment can be as low as 3 percent while the closing costs may be covered by the mortgage loan.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Even though the VA doesn't actually issue the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the buyer will just have 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. Usually you will pay a slightly higher rate on the loan financed by the seller.

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

Need to talk about down payment options? Give us a call: 7072522700.