Your Down Payment

Many borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new home, but don't know how to get together your down payment?

Slash the budget and build up savings. Scrutinize the budget to discover extra money to go toward your down payment. Also, you can look into bank programs in which some of your paycheck is automatically transferred into savings each pay period. You might look into some big expenses in your budget that you can live without, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.

Work more and sell items you do not need. Try to find an additional job. This can be rough, but the temporary difficulty can provide your down payment money. Additionally, you can make a comprehensive list of items you may be able to sell. Broken gold jewelry can be sold at local jewelers. Multiple small items might add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into retirement funds. Check the parameters of your specific plan. You may borrow money from a 401(k) plan for you down payment or get a withdrawal from an IRA. Be sure to ask your plan representative about the tax ramifications, your obligation for repayment, and possible early withdrawal penalties.

Request a generous gift from your family. First-time homebuyers somtimes get down payment help from gracious family members who are eager to help them get into their own home. Your family members may be willing to help you reach the goal of buying your first home.

Contact housing finance agencies. These agencies offer special mortgage loans for moderate and low income homebuyers, buyers interested in remodeling a home in a targeted area, and other groups as specified by each finance agency. Financing with a housing finance agency, you can receive a below market interest rate, down payment assistance and other perks. Housing finance agencies can assist you with a reduced rate of interest, help with your down payment, and offer other advantages. The principal purpose of not-for-profit housing finance agencies is to boost the purchase of homes in particular areas.

Research no-down and low-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low and moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling new homebuyers who might not be eligible for a typical mortgage loan, to obtain a mortgage. Interest rates for an FHA loan typically feature the going interest rate, but the down payment with an FHA mortgage will be smaller than those of conventional loans. Closing costs can be covered by the mortgage, and the down payment may be as low as 3 percent of the total amount.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has limited closing costs, and offers a competitive rate of interest. While 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 with the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you a portion of his home equity to assist you with your down payment funds. The buyer funds the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Generally, this form of second mortgage will have higher interest.

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

Want to discuss the best options for down payments? Give us a call at (407) 898-7559.

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