Building Your Down Payment

Lots of buyers can qualify for a loan, but they don't have a lot of money to pay the standard down payment. Here's where to get started

Cut expenses and save. Turn your budget inside out to find extra money to go toward your down payment. There are bank programs in which a specific portion of your take-home pay is automatically placed into savings each pay period. Some practical methods to build up funds include moving into less expensive housing, and staying home for your vacation for a year or two.

Work a second job and sell things you do not need. Perhaps you can find a second job and save your earnings. You can also seriously consider the possessions you really need and the items you may be able to put up for sale. Multiple small items could add up to a nice sum at a garage or tag sale. You might also research what your investments may sell for.

Tap into retirement funds. Research the specifics for your particular plan. You may take out money from a 401(k) plan for a down payment or get a withdrawal from an Individual Retirement Account. Make sure to learn about the tax ramifications, your obligation for repaying the money, and any penalties for withdrawing early.

Request a generous gift from family. Many buyers are sometimes fortunate enough to receive help with their down payment assistance from caring parents and other family members who are eager to help get them in their own home. Your family members may be inclined to help you reach the goal of owning your first home.

Contact housing finance agencies. These agencies provide provisional loan programs to moderate and low income homebuyers, buyers interested in sprucing up a house in a targeted area, and additional groups as specified by the finance agency. With the help of this kind of agency, you probably will be given an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies may assist eligible buyers with a reduced rate of interest, help with your down payment, and provide other assistance. The main goal of not-for-profit housing finance agencies is build up the purchase of homes in targeted parts of the city.

Explore no-down and low-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low and moderate-income families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who would not be able to qualify for a traditional loan by themselves, by providing mortgage insurance to the lenders. Down payment totals for FHA mortgages are below those with traditional mortgages, even though these mortgages have average interest rates. The required down payment can be as low as three percent and the closing costs might be financed in the mortgage loan.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This particular loan does not require a down payment, has limited closing costs, and provides a competitive interest rate. Even though the VA doesn't actually provide the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  You can finance your down payment with a second mortgage that closes with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this form of second mortgage has a higher rate of interest.

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

Need to talk about down payments? Call us: 5626935048.