Building Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have much to pay a down payment. Do you want to look into getting a new home, but don't know how to get together a down payment?

Slash the budget and build up savings. Look for ways you can reduce your expenditures to put away money for a down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a specific amount from your take-home pay transferred into savings. Some effective strategies to save additional funds include moving into a residence that is less expensive, and staying local for your family vacation for a year or two.

Sell items you do not need and find a part-time job. Perhaps you can get a second job to get your down payment money. You can also seriously consider the possessions you actually need and the items you migh be able to put up for sale. Multiple small things may add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into retirement funds. Investigate the provisions of your particular plan. It is possible to pull out funds from a 401(k) plan for you down payment or get a withdrawal from an Individual Retirement Account. Make sure to ask your plan representative about the tax ramifications, your obligation for repayment, and any penalties for withdrawing early.

Ask for help from generous family members. Many homebuyers are sometimes lucky enough to receive help with their down payment assistance from gracious parents and other family members who are prepared to help them get into their own home. Your family members may be eager to help you reach the goal of having your first home.

Learn about housing finance agencies. These agencies provide special mortgate loan programs- for moderate and low income borrowers, buyers interested in sprucing up a house within a targeted part of the city, and additional certain kinds of buyers as specified by the agency. Financing with this type of agency, you can get a below market interest rate, down payment assistance and other benefits. Housing finance agencies may assist eligible buyers with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit programs to promote the value of homes in particular neighborhoods.

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

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income buyers qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a loan. Interest rates for an FHA loan typically feature the market interest rate, while the down payment requirements for an FHA loan will be below those of conventional loans. Closing costs can be covered by the mortgage, while your down payment may be as low as 3% of the total.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has limited closing costs, and provides a competitive interest rate. While it's true that the mortgages don't originate from the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You may fund your down payment using a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you some of his home equity to help you get your down payment funds. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this kind of second mortgage will have higher interest.

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

Need to talk about the best options for down payments? Give us a call: 9043423622.

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