Putting Together Your Down Payment

Lots of people who are looking to buy a new home can qualify for various loan programs, but they don't have a lot of money to put up a down payment. We have a few suggestions

Slash your budget and build up savings. Scrutinize the budget to find ways you can cut expenses to go toward your down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into a savings account each pay period. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or skip a family vacation.

Work a second job and sell things you don't need. Perhaps you can get an additional job and build up your earnings. Additionally, you can make an exhaustive inventory of things you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelry stores. A closetful of small items can add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you own.

Tap into your retirement funds. Research the details for your particular plan. It is possible to borrow money from a 401(k) for a down payment or withdraw from an IRA. Be sure you understand about any penalties, the way this may affect on taxes, and repayment obligation.

Request a generous gift from family. Many homebuyers are often lucky enough to receive help with their down payment help from giving family members who are prepared to help them get into their own home. Your family members may be willing to help you reach the milestone of having your first home.

Contact housing finance agencies. Special mortgage loans are provided to buyers in certain situations, like low income buyers or buyers planning to remodel houses in a specific area, among others. With the help of this type of agency, you probably will get an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can assist eligible buyers with a lower interest rate, help with your down payment, and provide other advantages. The principal mission of non-profit housing finance agencies is to boost home ownership in certain areas.

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

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low and moderate-income Americans get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgage loans. FHA helps first-time buyers and others who might not be able to qualify for a traditional mortgage by themselves, by offering mortgage insurance to lenders. Interest rates for an FHA loan are normally the current interest rate, while the down payment for an FHA loan will be less than those of conventional loans. Closing costs may be included in the mortgage, and your down payment might be as low as 3% of the purchase price.

• VA mortgage loans

  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 competitive interest rate, no down payment, and limited closing costs. Although the mortgage loans aren't actually financed by the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You can finance your down payment through a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of having to put together the typical 20% down payment.

• Carry-Back loans

  In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. You would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remainder with the seller. Usually you'll pay a somewhat higher rate on the loan financed by the seller.

Want to discuss your down payment? Call us: 425-508-9988.