Building Your Down Payment

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Many borrowers can easily qualify for several different kinds of mortgages, but they don't have a lot of money to pay a down payment. Here are a few straightforward ways to get together your down payment

Cut expenses and save. Look for ways you can reduce your expenditures to set aside money for a down payment. You could also try enrolling in an automatic savings plan to have a percentage of your payroll automatically moved into a savings account. Some practical approaches to build up funds include moving into less expensive housing, and skipping a year's vacation.

Sell items you don't really need and get a second job. Look for an additional job. This can be exhausting, but the temporary trial can provide your down payment money. Additionally, you can put together a comprehensive inventory of items you can sell. Broken gold jewelry can bring a good price from local jewelry stores. Maybe you have collectibles you can sell at an online auction, or quality household items for a tag or garage sale. Also, you might want to consider selling any investments you hold.

Borrow from your retirement funds. Check the provisions of your particular program. You can pull out money from a 401(k) plan for you down payment or make a withdrawal from an Individual Retirement Account. Be sure you comprehend the tax consequences, repayment terms, and early withdrawal penalties.

Ask for help from family members. First-time homebuyers are often lucky enough to receive help with their down payment assistance from giving family members who may be willing to help get them in their first home. Your family members may be pleased to help you reach the milestone of buying your own home.

Learn about housing finance agencies. These types of agencies offer provisional mortgage loan programs- for low and moderate-income borrowers, buyers with an interest in sprucing up a residence within a particular part of the city, and additional groups as specified by each finance agency. Working through a housing finance agency, you probably will be given a below market interest rate, down payment help and other perks. Housing finance agencies can assist eligible homebuyers with a lower rate of interest, get you your down payment, and provide other benefits. The central mission of not-for-profit housing finance agencies is boosting residential ownership in certain parts of the city.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income buyers qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling buyers who will not qualify for a conventional loan, to obtain home financing. Interest rates for an FHA loan usually feature the market interest rate, but the down payment amounts for an FHA loan will be lower than those of conventional loans. The required down payment can be as low as three percent and the closing costs can be covered by the mortgage.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a competitive interest rate, no down payment, and reduced closing costs. While it's true that the mortgage loans are not actually financed by the VA, the department certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment with a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the home's price, and the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In the case of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Often, this type of second mortgage will have a higher rate of interest.

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

Need to talk about down payment options? Call us: (925) 560-7644.

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