Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have a lot of money to pay a down payment. Start here

Cut expenses and save. Scrutinize the budget to find extra money to go toward your down payment. You might also try enrolling in an automatic savings plan to automatically have a set amount from your take-home pay moved into savings. You could look into some big expenses in your spending history that you can live without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a vacation.

Sell items you don't need and find a part-time job. Perhaps you can get a second job to get your down payment money. You can also get creative about the items you can sell. Maybe you have collectibles you can put up for sale on an auction website, or quality household items for a garage or tag sale. You can also research what any investments you own will bring if sold.

Borrow funds from a retirement plan. Explore the specifics for your particular plan. Some homebuyers get down payment money by withdrawing funds from Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure you comprehend the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for help from members of your family. Many homebuyers are sometimes fortunate enough to receive help with their down payment help from gracious family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the milestone of buying your first home.

Research housing finance agencies. These types of agencies provide provisional mortgage loans for moderate and low income borrowers, buyers interested in remodeling a home in a targeted part of the city, and other certain kinds of buyers as defined by the finance agency. Working through this type of agency, you may receive an interest rate that is below market, down payment help and other incentives. These types of agencies can assist eligible homebuyers with a lower rate of interest, get you your down payment, and offer other advantages. These non-profit programs to boost home ownership in specific areas.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get home financing. FHA provides mortgage insurance to the private lenders, enabling homebuyers who may not qualify for a conventional mortgage, to obtain financing. Interest rates with an FHA mortgage are typically the current interest rate, but the down payment requirements for an FHA loan are lower than those of conventional loans. Closing costs may be financed in the mortgage, and the down payment may be as low as 3 percent of the total amount.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive interest rate. While the loans are not actually financed by the VA, the office verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to lend you part of his own equity to help you get your down payment funds. You would finance the largest portion of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Typically you'll pay a slightly higher rate on the loan financed by the seller.

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

Want to discuss the best options for down payments? Give us a call at 4357556622.