Building Your Down Payment

Lots of buyers can easily qualify for a loan, but they don't have much to pay the standard down payment. Here are a few ideas:

Slash the budget and build up savings. Look for ways you can trim your expenses to save toward a down payment. You could also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically deposited into savings. You could look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay local for your vacation.

Sell things you do not really need and find a part-time job. Look for a second job. This can be exhausting, but the temporary trial can help you get your down payment. Additionally, you can put together a comprehensive list of items you can sell. Broken gold jewelry can bring a good amount from local jewelry stores. Multiple small items may add up to a fair amount at a garage or tag sale. You might also look into what your investments may sell for.

Borrow from retirement funds. Explore the details for your particular plan. Some people get down payment money from withdrawing from their IRAs or getting money out of their 401(k) programs. Be sure to learn about the tax consequences, your obligation for repaying funds, and any early withdrawal penalties.

Ask for help from members of your family. Many homebuyers somtimes get down payment assistance from caring parents and other family members who are prepared to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of owning your first home.

Research housing finance agencies. These types of agencies provide special loan programs for moderate and low income buyers, buyers interested in sprucing up a home in a particular part of the city, and additional groups as specified by the agency. Financing with a housing finance agency, you may get a below market interest rate, down payment assistance and other perks. Housing finance agencies can help you with a lower interest rate, get you your down payment, and offer other advantages. These non-profit programs were formed to build up home ownership in certain neighborhoods.

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

  • FHA mortgages

    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 and moderate-income Americans 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, helping the buyers to become eligible for a mortgage loan. Interest rates with an FHA mortgage are normally the current interest rate, while the down payment requirements with an FHA loan will be less than those of conventional loans. Closing costs can be included in the mortgage, and your down payment may be as low as 3% 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 rate of interest, no down payment, and reduced closing costs. Although the VA doesn't provide the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Often, this kind of second mortgage has a higher rate of interest.

No matter your method of putting together your down payment, the satisfaction of owning your own home will be just as sweet!

Need to talk about down payments? Give us a call: (904) 342-3622.

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