Building Your Down Payment

Lots of buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Get started here

Slash your budget and build up savings. Look for ways to trim your monthly expenses to save toward a down payment. You may also decide to enroll in an automatic savings plan at your bank to have a portion of your payroll automatically moved into savings. Some effective strategies to save additional funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Sell things you don't really need and get a second job. Perhaps you can find a second job and save your earnings. You can also get creative about the things you migh be able to put up for sale. Maybe you have desirable items you can put up for sale at an auction website, or quality household items for a tag or garage sale. Also, you can look into selling any investments you hold.

Borrow from your retirement plan. Check the provisions of your specific program. It is possible to borrow money from a 401(k) plan for a down payment or make a withdrawal from an IRA. Make sure to learn about the tax consequences, repayment terms, and penalties for withdrawing early.

Request a gift from your family. First-time buyers somtimes receive down payment assistance from thoughtful parents and other family members who are able to help them get into their own home. Your family members may be willing to help you reach the goal of buying your own home.

Research housing finance agencies. Provisional mortgage loans are given to buyers in certain circumstances, such as low income buyers or future homeowners planning to improve homes in a certain part of town, among others. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment help and other benefits. Housing finance agencies may help you with a lower interest rate, 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 particular areas.

Explore no-down and low-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is 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 offers mortgage insurance to the private lenders, making the buyers eligible for financing. Interest rates for an FHA loan are usually the market interest rate, but the down payment with an FHA mortgage will be below those of conventional loans. Closing costs can be included in the mortgage, and the down payment might be as low as 3 percent of the total.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a competitive interest rate, no down payment, and reduced closing costs. Although the VA does not actually finance the loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  You can fund your down payment with a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the home's price, and the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to lend you a piece of his home equity to help you get your down payment money. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher rate with the loan from the seller.

Want to discuss your down payment? Give us a call: 7068605514.