Your Down Payment

Lots of borrowers can easily qualify for various loan programs, but they don't have a lot of money to put up a down payment. Start here

Tighten your belt and save. Turn your budget upside-down to find ways you can cut expenses to go toward your down payment. There are bank programs in which a portion of your paycheck is automatically placed into savings each pay period. You would be wise to 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 may decide to move into less expensive housing, or skip a vacation.

Work a second job and sell things you do not need. Try to find a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also seriously consider the possessions you actually need and the things you can sell. Maybe you have desirable items you can put up for sale on an auction website, or household items for a garage or tag sale. You can also explore what your investments will sell for.

Tap into your retirement funds. Explore the specifics of your individual plan. Many homebuyers get down payment money by withdrawing what they need from their IRAs or borrowing from their 401(k) programs. Be sure you comprehend the tax ramifications, your obligation for repaying the money, and any penalties for withdrawing early.

Ask for a gift from family. First-time homebuyers somtimes receive down payment help from thoughtful family members who are prepared to help them get into their first home. Your family members may be pleased at the chance to help you reach the milestone of buying your own home.

Research housing finance agencies. These types of agencies extend provisional mortgage programs to moderate and low income homebuyers, buyers interested in renovating a residence in a particular area, and other certain kinds of buyers as specified by each finance agency. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment help and other advantages. These kinds of agencies can help you with a reduced rate of interest, help with your down payment, and offer other advantages. The main mission of not-for-profit housing finance agencies is promoting the purchase of homes in targeted places.

Find out about low-down and no-down mortgage loan programs.

• FHA mortgages

  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 aiding low to moderate-income families 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 helps first-time homebuyers and others who may not be eligible for a conventional mortgage loan on their own, by offering mortgage insurance to private lenders. Interest rates with an FHA mortgage normally feature the going interest rate, while the down payment amounts for an FHA mortgage will be smaller than those of conventional loans. Closing costs might be included in the mortgage, while the down payment could be as low as 3 percent of the total.

• VA mortgages

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a low fixed interest rate, no down payment, and limited closing costs. Although the VA doesn't finance the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  You may fund your down payment through a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of having to pull together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you part of his home equity to help you get your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a slightly higher interest rate with the loan financed by the seller.

No matter how you gather your down payment, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss the best options for down payments? Call us: 206-920-1112.