Your Down Payment

Many buyers qualify for a mortgage loan, but they don't have much to put up a down payment. Below are a few straightforward methods that will help you put together a down payment

Slash the budget and build up savings. Look for ways you can trim your monthly expenditures to set aside funds for a down payment. There are bank programs through which some of your take-home pay is automatically placed into savings every pay period. 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 decide to move into less expensive housing, or stay local for your annual vacation.

Sell things you don't really need and get a second job. Maybe you can get an additional job and build up your earnings. You can also get creative about the items you migh be able to put up for sale. Multiple small items could add up to a fair amount at a garage or tag sale. You could also explore what your investments will sell for.

Borrow from retirement funds. Check the provisions of your specific program. Some people get down payment money by withdrawing from IRAs or borrowing from their 401(k) programs. Make sure to find out about the tax consequences, your obligation for repayment, and possible early withdrawal penalties.

Request a gift from your family. Many buyers somtimes get help with their down payment assistance from gracious family members who are prepared to help get them in their first home. Your family members may be willing to help you reach the goal of owning your own home.

Contact housing finance agencies. Special loan programs are given to buyers in specific circumstances, such as low income buyers or people looking to renovating homes in a certain area, among others. Financing with a housing finance agency, you can be given a below market interest rate, down payment help and other perks. These kinds of agencies can help you with a lower interest rate, get you your down payment, and offer other assistance. The main purpose of not-for-profit housing finance agencies is to promote home ownership in particular areas.

Explore no-down and low-down mortgage loans.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low to moderate-income Americans qualify for mortgage loans. Part of the United States 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 financing. Down payment sums for FHA mortgages are lower than those for typical mortgages, although these mortgages have current rates of interest. Closing costs might be covered by the mortgage, and your down payment might be as low as 3% of the total.

  • VA mortgages

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a competitive interest rate, no down payment, and reduced closing costs. Even though the VA doesn't issue the mortgages, it does issue a certificate of eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. Instead of the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you some of his own equity to assist you with your down payment money. You would borrow the majority of the purchase price from a traditional mortgage lender and finance the remaining amount with the seller. Usually you will pay a somewhat higher rate with the loan financed by the seller.

The satisfaction will be the same, no matter how you manage to come up with your down payment. Your brand new home will be your reward!

Want to discuss down payments? Give us a call at 708.966.9005.

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