Your Down Payment

Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to get together a down payment

Slash the budget and build up savings. Look for ways to trim your monthly expenditures to set aside money for a down payment. You could also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into a savings account. Some effective strategies to save additional funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Work more and sell items you do not need. Try to get an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can put together a comprehensive list of things you may be able to sell. Broken gold jewelry can bring a good amount from local jewelers. A closetful of small items may add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow from a retirement plan. Explore the specifics of your particular plan. Many homebuyers get down payment money from withdrawing funds from their IRAs or borrowing from 401(k) programs. Make sure you are clear about any penalties, the way this could affect on taxes, and repayment terms.

Request a gift from family. Many buyers somtimes get down payment help from caring family members who are willing to help get them in their own home. Your family members may be willing to help you reach the milestone of buying your own home.

Learn about housing finance agencies. Special loan programs are offered to homebuyers in specific circumstances, like low income homebuyers or homebuyers planning to renovating homes in a particular part of town, among others. With the help of a housing finance agency, you may get a below market interest rate, down payment assistance and other perks. Housing finance agencies can help eligible buyers with a reduced interest rate, get you your down payment, and offer other assistance. The main mission of not-for-profit housing finance agencies is boosting the purchase of homes in targeted parts of the city.

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

• 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 Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting home financing. FHA aids first-time homebuyers and others who would not be able to qualify for a typical mortgage loan on their own, by offering mortgage insurance to the lenders. Interest rates with an FHA mortgage are normally the market interest rate, while the down payment amounts for an FHA loan will be less than those of conventional loans. Closing costs might be covered by the mortgage, and the down payment might be as low as 3 percent of the total.

• VA mortgages

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans qualify for a VA loan, which usually offers a competitive interest rate, no down payment, and minimal closing costs. Although the mortgages don't originate from the VA, the office verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You can finance your down payment using a second mortgage that closes at the same time as the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her home equity. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Generally, this form of second mortgage has a higher rate of interest.

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

Want to discuss down payment options? Call us at 1-800-606-2794.