Putting Together Your Down Payment

Lots of buyers qualify for various loan programs, but they can't afford a large down payment. Here's where to get started

Reduce expenses and save. Scrutinize your budget to discover ways you can cut expenses to go toward your down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into savings every pay period. Some practical approaches to build up funds include moving into a residence that is less expensive, and staying local for your vacation this year.

Sell items you don't need and find a part-time job. Try to get 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 things you can put up for sale. You may own desirable items you can sell at an auction website, or household goods for a tag or garage sale. You might also explore what your investments may bring if sold.

Tap into your retirement funds. Explore the specifics for your individual plan. Many people get down payment money by withdrawing from IRAs or borrowing from their 401(k) plans. Be sure to ask your plan representative about the tax consequences, repayment terms, and penalties for withdrawing early.

Ask for assistance from generous members of your family. First-time homebuyers somtimes receive help with their down payment assistance from giving parents and other family members who are eager to help get them in their own home. Your family members may be pleased to help you reach the goal of having your first home.

Learn about housing finance agencies. These types of agencies offer special mortgage programs for moderate and low income borrowers, buyers with an interest in renovating a residence in a particular part of the city, and other certain kinds of buyers as defined by the agency. Financing through a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist eligible buyers with a reduced interest rate, help with your down payment, and offer other advantages. These non-profit agencies exist to boost community in particular places.

Learn about low-down and no-down mortgages.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low and moderate-income families get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, helping the buyers to become eligible for a mortgage loan. Down payment requirements for FHA loans are lower than those for typical mortgage loans, even though these loans hold average rates of interest. The required down payment may be as low as 3 percent while the closing costs could be financed in the mortgage.

• VA mortgage loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a low rate of interest, no down payment, and minimal closing costs. Although the mortgage loans don't originate from the VA, the office verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You can fund your down payment through a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. In contrast to 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" mortgage, the seller agrees to loan you a piece of his home equity to assist you with your down payment funds. You would finance the largest portion of the purchase price with a traditional lender and borrow the remainder from the seller. Typically you'll pay a somewhat higher interest rate on the loan from the seller.

No matter how you gather down payment funds, the satisfaction of living in your own home will be just as great!

Need to talk about the best options for down payments? Call us: 7068605514.