Building Your Down Payment

Many borrowers can easily qualify for a mortgage loan, but they can't afford a large down payment. Here's where to get started

Tighten your belt and save. Turn your budget upside-down to discover ways you can cut expenses to save for your down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically deposited into savings every pay period. Some effective approaches to put together funds include moving into a residence that is less expensive, and staying local for your family vacation for a year or two.

Sell items you don't really need and get a part-time job. Maybe you can get a second job and build up your earnings. Additionally, you can put together a comprehensive inventory of items you can sell. Unworn gold jewelry can be sold at local jewelers. A closetful of small things can add up to a nice sum at a garage or tag sale. You could also explore what any investments you have could sell for.

Borrow from retirement funds. Investigate the provisions of your specific plan. Some homebuyers get down payment money by withdrawing what they need from IRAs or pulling money out of their 401(k) programs. Be sure you comprehend the tax consequences, repayment terms, and possible penalties for withdrawing early.

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

Learn about housing finance agencies. Special loan programs are offered to homebuyers in specific situations, like low income homebuyers or people planning to improve homes in a targeted area, among others. With the help of this kind of agency, you may receive a below market interest rate, down payment assistance and other perks. Housing finance agencies can help eligible buyers with a lower rate of interest, help with your down payment, and offer other advantages. The main goal of non-profit housing finance agencies is build up home ownership in particular parts of the city.

Learn about low-down and no-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income individuals qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans. FHA offers mortgage insurance to private lenders, enabling homebuyers who might not qualify for a conventional mortgage loan, to get a mortgage. Down payment requirements for FHA loans are smaller than those of typical mortgage loans, although these mortgages have current interest rates. Closing costs may be included in the mortgage, and the down payment can be as low as 3% of the total.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a reasonable interest rate, no down payment, and limited closing costs. While the VA doesn't actually provide the mortgages, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Usually the piggyback loan takes care of 10 percent of the home's price, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her equity. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher interest rate with the loan financed by the seller.

The satisfaction will be the same, no matter which approach you use to come up with the down payment. Your new home will be well worth it!

Need to talk about the best options for down payments? Call us at 1-800-606-2794.