Your Down Payment

Many borrowers qualify for various loan programs, but they can't afford a large down payment. Start here

Cut expenses and save. Turn your budget upside-down to discover ways you can cut expenses to go toward your down payment. You also might enroll in an automatic savings plan at your bank to automatically have a specific amount from your paycheck moved into a savings account. Some practical strategies to save additional funds include moving into a residence that is less expensive, and skipping a year's 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 trial can help you get your down payment. You can also seriously consider the possessions you actually need and the things you can put up for sale. Maybe you own desirable items you can put up for sale on an online auction, or quality household items for a garage or tag sale. Also, you can consider selling any investments you hold.

Tap into your retirement funds. Check the provisions of your specific program. Some homebuyers get down payment money from withdrawing what they need from IRAs or pulling funds out of 401(k) plans. Make sure to find out about the tax ramifications, your obligation for repaying the money, and early withdrawal penalties.

Request a generous gift from your family. First-time homebuyers somtimes get help with their down payment assistance from gracious family members who may be prepared to help get them in their own home. Your family members may be inclined to help you reach the milestone of having your first home.

Research housing finance agencies. Provisional loan programs are provided to buyers in specific circumstances, such as low income purchasers or homebuyers looking to remodel homes in a particular neighborhood, among others. Working through this kind of agency, you probably will receive an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies can assist you with a lower rate of interest, get you your down payment, and offer other benefits. The principal purpose of non-profit housing finance agencies is to promote home ownership in certain places.

Explore no-down and low-down mortgages.

  • FHA 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 Americans get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for home financing. FHA helps first-time buyers and others who may not be able to qualify for a conventional loan by themselves, by providing mortgage insurance to lenders. Down payment sums for FHA loans are lower than those of conventional mortgages, although these loans come with average rates of interest. The down payment can go as low as 3 percent and the closing costs may be included in the mortgage loan.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. While the VA does not actually finance the mortgage loans, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, and the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to loan you some of his home equity to help you with your down payment money. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically, this kind of second mortgage has a higher rate of interest.

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

Want to discuss down payments? Call us at (334) 285-8850.

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