Putting Together Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new house, but aren't sure how to get together a down payment?

Slash the budget and build up savings. Look for ways to reduce your expenses to save toward a down payment. There are bank programs through which some of your take-home pay is automatically deposited into savings every pay period. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay local for your family vacation.

Work more and sell items you don't need. Maybe you can find a second job to get your down payment money. Additionally, you can put together a comprehensive list of items you may be able to sell. Broken gold jewelry can be sold at local jewelers. Maybe you have collectibles you can sell on an online auction, or household goods for a tag or garage sale. You might also research what any investments you hold may bring if sold.

Tap into your retirement funds. Investigate the parameters of your particular plan. It is possible to borrow funds from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Make sure to ask your plan representative about the tax ramifications, repayment terms, and any early withdrawal penalties.

Ask for help from family members. First-time homebuyers somtimes get help with their down payment assistance from giving parents and other family members who are prepared to help them get into their own home. Your family members may be eager to help you reach the goal of buying your own home.

Research housing finance agencies. These agencies provide provisional mortgage loans to moderate and low income homebuyers, buyers with an interest in sprucing up a home within a targeted area, and additional groups as defined by each finance agency. Working through a housing finance agency, you may receive a below market interest rate, down payment help and other incentives. Housing finance agencies may assist eligible homebuyers with a lower rate of interest, help with your down payment, and provide other advantages. The principal goal of not-for-profit housing finance agencies is to promote the purchase of homes in targeted areas.

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

• FHA mortgages

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income families get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for mortgages. FHA helps first-time buyers and others who may not be able to qualify for a traditional mortgage loan by themselves, by offering mortgage insurance to the lenders. Interest rates with an FHA mortgage are typically the current interest rate, but the down payment requirements with an FHA loan are below those of conventional loans. Closing costs can be covered by the mortgage, and your down payment may be as low as 3 percent of the total amount.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive interest rate. Even though the mortgages don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. In most cases the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of needing to put together the usual 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Typically, this type of second mortgage will have higher interest.

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

Need to talk about down payment options? Give us a call: 925-895-4155.