Putting Together Your Down Payment

Lots of people who are looking to purchase a new home qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Want to look into getting a new house, but don't know how to get together a down payment?

Tighten your belt and save. Turn your budget inside out to uncover extra money to save for your down payment. You could also decide to enroll in an automatic savings plan to automatically have a specific amount from your paycheck transferred into savings. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay local for your family vacation.

Work more and sell things you don't need. Maybe you can find an additional job to get your down payment money. You can also get creative about the items you can put up for sale. Maybe you own collectibles you can sell at an auction website, or quality household goods for a tag or garage sale. You might also look into what any investments you own could sell for.

Borrow your down payment from a retirement plan. Explore the specifics for your individual plan. Many homebuyers get down payment money from withdrawing from Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure you know about any penalties, the effect this could have on your taxes, and repayment obligation.

Ask for help from generous family members. First-time homebuyers are often fortunate enough to receive down payment assistance from gracious parents and other family members who are willing to help them get into their own home. Your family members may be inclined to help you reach the milestone of owning your first home.

Research housing finance agencies. These agencies provide provisional mortgage loans for moderate and low income buyers, buyers with an interest in remodeling a home in a particular area, and other specific types of buyers as defined by each agency. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment assistance and other advantages. These types of agencies can help eligible buyers with a lower interest rate, help with your down payment, and provide other advantages. The main goal of not-for-profit housing finance agencies is boosting the purchase of homes in specific parts of the city.

Find out about low-down and no-down mortgages.

  • 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 part in assisting low to moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting home financing. FHA helps first-time buyers and others who may not be able to qualify for a typical mortgage loan by themselves, by providing mortgage insurance to private lenders. Down payment amounts for FHA loans are below those for traditional mortgages, although these loans come with current rates of interest. The required down payment can be as low as three percent while the closing costs might be financed in the mortgage.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. Although the mortgage loans aren't actually provided by the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes at the same time as the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In the case of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Typically, this form of second mortgage has a higher rate of interest.

The satisfaction will be the same, no matter which method you use to come up with the down payment. Your new home will be your reward!

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

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2800 North Fifth Street Suite 301B
St. Augustine, FL 32084