Putting Together Your Down Payment

Lots of people who are looking to buy a new home qualify for various loan programs, but they don't have much to put up the standard down payment. Want to buy a new home, but don't know how you should put together a down payment?

Tighten your belt and save. Turn your budget upside-down to uncover extra money to go toward your down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into savings every pay period. Some effective approaches to put together funds include moving into less expensive housing, and staying home for your family vacation this year.

Work a second job and sell things you don't need. Perhaps you can get an additional job to get your down payment money. You can also seriously consider the possessions you actually need and the items you can sell. You may own collectibles you can sell at an online auction, or household items for a tag or garage sale. Also, you can look into selling any investments you hold.

Borrow from your retirement funds. Check the parameters of your particular plan. Many people get down payment money from withdrawing what they need from their Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you know about any penalties, the way this may affect on your income taxes, and repayment terms.

Request a gift from family. Many buyers are sometimes lucky enough to get help with their down payment help from giving parents and other family members who are willing to help get them in their first home. Your family members may be happy at the chance to help you reach the goal of owning your own home.

Research housing finance agencies. These agencies offer provisional mortgage programs for moderate and low income buyers, buyers with an interest in rehabilitating a home in a targeted area, and other groups as specified by the finance agency. With the help of a housing finance agency, you can be given a below market interest rate, down payment assistance and other incentives. Housing finance agencies may assist you with a lower interest rate, help with your down payment, and provide other assistance. The primary goal of non-profit housing finance agencies is boosting residence ownership in certain places.

Learn 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 an important part in aiding low to moderate-income buyers qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages. FHA offers mortgage insurance to private lenders, enabling buyers who will not be eligible for a conventional mortgage, to get home financing. Down payment requirements for FHA mortgages are lower than those with traditional mortgages, even though these mortgages have current interest rates. Closing costs might be included in the mortgage, and the down payment might be as low as 3 percent of the total.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a competitive interest rate, no down payment, and minimal closing costs. While the mortgages don't originate from the VA, the office verfifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You can fund your down payment using a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you a portion of his home equity to help you get your down payment money. The buyer finances the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher rate on the loan from the seller.

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

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

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