Your Down Payment

Lots of people who are looking to buy a new house can easily qualify for various loan programs, but they don't have much to put up the standard down payment. Here are a few straightforward ways to get together a down payment

Tighten your belt and save. Look for ways to trim your expenditures to set aside funds for a down payment. Also, you can look into bank programs in which a specific portion of your paycheck is automatically transferred into savings each pay period. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your family vacation.

Sell things you do not need and find a part-time job. Perhaps you can find a second job to get your down payment money. You can also get serious about the possessions you really need and the items you may be able to put up for sale. You might own collectibles you can put up for sale at an online auction, or household goods for a garage or tag sale. You could also look into what your investments could bring if sold.

Tap into retirement funds. Research the specifics for your individual plan. You can borrow money from a 401(k) plan for you down payment or perform a withdrawal from an IRA. Be sure you understand the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for a gift from your family. Many homebuyers somtimes get down payment assistance from gracious family members who may be anxious to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your own home.

Research housing finance agencies. These agencies offer special mortgage programs for low and moderate-income homebuyers, buyers interested in remodeling a house within a targeted area, and additional groups as specified by the finance agency. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can help you with a lower rate of interest, help with your down payment, and provide other benefits. These non-profit programs were formed to build up the value of homes in certain neighborhoods.

Learn about low-down and no-down mortgages.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low and moderate-income buyers qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to qualify for home financing. FHA assists first-time homebuyers and others who might not be able to qualify for a traditional loan on their own, by providing mortgage insurance to private lenders. Interest rates with an FHA mortgage normally feature the market interest rate, but the down payment for an FHA loan will be below those of conventional loans. The down payment may go as low as 3 percent and the closing costs may be covered by the mortgage loan.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a low fixed interest rate, no down payment, and limited closing costs. Even though the VA does not actually finance the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. You would borrow the largest portion of the purchase price from a traditional mortgage lender and finance the remainder with the seller. Typically you will pay a slightly higher interest rate with the loan financed by the seller.

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

Need to talk about the best options for down payments? Give us a call: (407) 898-7559.

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