Building Your Down Payment

Many buyers can easily qualify for various loan programs, but they don't have much to pay a down payment. Here are a few tips:

Cut expenses and save. Be on the look-out for ways you can reduce your expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into savings. Some practical approaches to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Sell things you don't need and find a part-time job. Maybe you can get a second job and build up your earnings. Additionally, you can put together a comprehensive list of items you can sell. Unused gold jewelry can be sold at local jewelry stores. You might own collectibles you can sell at an auction website, or household goods for a tag or garage sale. You might also research what any investments you hold could bring if sold.

Borrow money from a retirement plan. Research the details for your particular plan. You may take out money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure you comprehend the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for a gift from your family. Many homebuyers are sometimes lucky enough to get help with their down payment assistance from giving parents and other family members who may be prepared to help them get into their own home. Your family members may be inclined to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Special loan programs are offered to homebuyers in certain situations, like low income homebuyers or future homeowners looking to remodel homes in a targeted place, among others. With the help of this type of agency, you may get a below market interest rate, down payment assistance and other incentives. These kinds of agencies may assist you with a reduced rate of interest, help with your down payment, and provide other benefits. The main mission of non-profit housing finance agencies is promoting home ownership in specific parts of the city.

Learn about low-down and no-down mortgage loans.

  • FHA mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low to moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting home financing. FHA offers mortgage insurance to private lenders, enabling homebuyers who will not be eligible for a conventional loan, to receive a mortgage. Interest rates with an FHA loan are normally the market interest rate, but the down payment with an FHA mortgage will be smaller than those of conventional loans. The down payment may go as low as three percent and the closing costs might be financed in the mortgage.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a low interest rate, no down payment, and minimal closing costs. Although the VA doesn't provide the mortgage 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. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you a piece of his own equity to help you with your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher rate with the loan financed by the seller.

The satisfaction will be the same, no matter how you manage to get together your down payment. Your brand new home will be well worth it!

Want to discuss down payment options? Give us a call: (904) 342-3622.

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