Building Your Down Payment

Many buyers qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where you start

Slash your budget and build up savings. Look for ways to trim your monthly expenditures to set aside funds for a down payment. You might also try enrolling in an automatic savings plan to automatically have a predetermined portion of your paycheck moved into your savings account. Some effective methods to put together funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Work more and sell items you don't need. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get creative about the items you can sell. You might have desirable items you can sell at an online auction, or quality household goods for a tag or garage sale. You can also explore what any investments you have could sell for.

Tap into retirement funds. Research the specifics of your particular plan. You can borrow money from a 401(k) plan for you down payment or get a withdrawal from an IRA. Be sure you understand about any penalties, the effect this may have on your income taxes, and repayment terms.

Ask for a generous gift from family. First-time homebuyers somtimes receive help with their down payment help from gracious family members who may be willing to help them get into their first home. Your family members may be willing to help you reach the milestone of having your first home.

Contact housing finance agencies. Special mortgate loan programs are given to buyers in specific situations, such as low income homebuyers or people looking to remodel houses in a particular neighborhood, among others. With the help of this type of agency, you can be given an interest rate that is below market, down payment help and other incentives. These types of agencies may help you with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit programs exist to promote community in particular neighborhoods.

Explore no-down and low-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income families qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage. Down payment requirements for FHA mortgages are less than those for typical mortgage loans, although these loans hold current interest rates. The required down payment can be as low as three percent while the closing costs could be covered by the mortgage loan.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Although the VA doesn't actually provide the mortgage loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  In the option of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Generally, this kind of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter which method you use to put together the down payment. Your new home will be worth it!

Want to discuss your down payment? Give us a call at (562) 693-5048.