Building Your Down Payment

Lots of people who are looking to buy a new home qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where you start

Slash the budget and build up savings. Be on the look-out for ways you can trim your expenses to put away money for a down payment. Also, you can look into bank programs in which some of your paycheck is automatically deposited into savings each pay period. Some effective strategies to build up funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Work a second job and sell things you do not need. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the things you can put up for sale. A closetful of small things might add up to a fair amount at a garage or tag sale. You might also research what any investments you hold may sell for.

Tap into retirement funds. Investigate the parameters of your retirement 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 repaying the money, and possible penalties for withdrawing early.

Request a generous gift from your family. Many buyers somtimes get help with their down payment assistance from thoughtful parents and other family members who may be prepared to help get them in their own home. Your family members may be eager to help you reach the goal of having your own home.

Research housing finance agencies. These types of agencies extend provisional mortgate loan programs to moderate and low income borrowers, buyers with an interest in rehabilitating a house within a targeted part of the city, and additional groups as specified by each agency. Financing with this kind of agency, you probably will receive an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies can assist you with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit programs to promote the value of homes in particular areas.

Learn about low-down and no-down mortgage loan programs.

• 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 helping low to moderate-income individuals get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who might not be able to qualify for a typical mortgage loan by themselves, by providing mortgage insurance to lenders. Down payment totals for FHA loans are smaller than those for conventional mortgage loans, even though these mortgages come with average rates of interest. The required down payment can go as low as 3 percent while the closing costs may be covered by the mortgage.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a competitive interest rate, no down payment, and limited closing costs. Even though the mortgages don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Generally the piggyback loan is for 10 percent of the home's price, and the first mortgage finances 80 percent. The borrower covers the remaining 10%, instead of having to pull together the usual 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a somewhat higher rate with the loan from the seller.

Need to talk about down payments? Call us: 9043423622.