Putting Together Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they don't have a large sum of cash to pay a down payment. We have a few ideas:

Tighten your belt and save. Turn your budget upside-down to find ways you can cut expenses to go toward your down payment. You can also try enrolling in a savings plan that automatically transfers a specific amount from your paycheck into your savings account. Some practical methods to save additional funds include moving into a residence that is less expensive or skipping your family vacation for a year or two.

Sell items you don't really need and find a part-time job. Perhaps you can get an additional job and build up your earnings. You can also get creative about the things you can put up for sale. A closetful of small items could add up to a fair amount at a garage or yard sale. You might also explore what any investments you have may bring if sold.

Borrow funds from a retirement plan. Research the specifics for your individual plan. Some people get down payment money from withdrawing funds from their IRAs or pulling money out of their 401(k) programs. You will need to ensure you are knowledgeable about any penalties, the way this will affect you on your income taxes, and repayment terms.

Ask for a generous gift from family. First-time buyers sometimes get down payment assistance from thoughtful parents and other family members who may be able to help them get into their own home. Your family members may be willing to help you reach the milestone of having your own home.

Learn about housing finance agencies. Provisional loan programs are offered to homebuyers in certain circumstances, such as low income buyers or buyers looking to renovate homes in a certain place, among others. Working through this type of agency, you can be given a below market interest rate, down payment assistance and other perks. These kinds of agencies may help eligible homebuyers with a lower interest rate, get you your down payment, and offer other assistance. The central purpose of not-for-profit housing finance agencies is promoting the purchase of homes in particular places.

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

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgages. FHA helps first-time buyers and others who may not be able to qualify for a traditional mortgage loan on their own, by providing mortgage insurance to the lenders. Down payment totals for FHA loans are lower than those of typical mortgage loans, although these mortgages hold current interest rates. Closing costs might be financed in the mortgage, while the down payment could be as low as 3 percent of the total.

• VA mortgage loans

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a competitive fixed interest rate, no down payment, and limited closing costs. Although the VA doesn't provide the mortgage loans, it does certify eligibility to apply 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. The borrower covers the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  When a seller carries back a second mortgage, the seller loans you part of his or her home equity. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically, this type of second mortgage will have higher interest.

No matter your strategy of pulling together your down payment, the thrill of reaching the goal of living in your own home will be just as sweet!

Need to talk about the best options for down payments? Call us: 561-207-8082.