Building Your Down Payment

Lots of borrowers qualify for a mortgage loan, but they don't have a lot of money to pay the standard down payment. We have a few ideas

Cut expenses and save. Look for ways you can reduce your monthly expenses to save toward a down payment. There are bank programs in which a specific portion of your paycheck is automatically transferred into a savings account each pay period. Some practical ways to build up funds include moving into less expensive housing, and skipping your vacation for a year or two.

Sell things you do not really need and find a second job. Perhaps you can get a second job to get your down payment money. You can also get creative about the items you can put up for sale. Multiple small things might add up to a fair amount at a garage or tag sale. You could also research what any investments you have could sell for.

Borrow funds from a retirement plan. Explore the specifics of your particular plan. It is possible to take out funds from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. Be sure you comprehend the tax consequences, repayment terms, and possible early withdrawal penalties.

Request a gift from your family. First-time homebuyers somtimes get help with their down payment help from caring family members who may be able to help get them in their first home. Your family members may be inclined to help you reach the goal of owning your first home.

Research housing finance agencies. Special mortgage loans are provided to homebuyers in specific circumstances, like low income buyers or future homeowners looking to renovating homes in a specific place, among others. Working with a housing finance agency, you can be given a below market interest rate, down payment assistance and other perks. These types of agencies may assist eligible buyers with a reduced interest rate, help with your down payment, and offer other benefits. These non-profit agencies were formed to build up community in particular places.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (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 part in helping low to moderate-income individuals qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be eligible for a typical mortgage by themselves, by providing mortgage insurance to the private lenders. Down payment requirements for FHA loans are less than those for traditional mortgage loans, although these loans hold current interest rates. Closing costs can be included in the mortgage, while your down payment might be as low as 3% of the total.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive interest rate. Even though the mortgage loans aren't actually financed by the VA, the department verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You can fund your down payment with a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. Instead of the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you some of his home equity to help you get your down payment money. You would borrow the majority of the purchase price from a traditional mortgage lender and borrow the remaining amount from the seller. Usually you'll pay a somewhat higher rate on the loan financed by the seller.

The feeling of accomplishment will be the same, no matter which strategy you use to put together the down payment. Your brand new home will be well worth it!

Want to discuss down payments? Give us a call at (904) 342-3622.

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