Putting Together Your Down Payment

Lots of buyers can easily qualify for a mortgage loan, but they don't have much to pay the standard down payment. Here's where to get started

Tighten your belt and save. Scrutinize the budget to find ways you can cut expenses to save for your down payment. There are bank programs through which a portion of your paycheck is automatically placed into savings every pay period. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or stay local for your vacation.

Work more and sell things you do not need. Perhaps you can get a second job to get your down payment money. You can also seriously consider the possessions you actually need and the things you may be able to sell. Multiple small things can add up to a nice sum at a garage or tag sale. You can also explore what your investments may bring if sold.

Borrow from your retirement funds. Research the details for your individual plan. It is possible to take out funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Be sure to find out about the tax consequences, repayment terms, and possible early withdrawal penalties.

Request a generous gift from your family. Many homebuyers are often lucky enough to get down payment help from giving family members who are prepared to help get them in their first home. Your family members may be pleased to help you reach the goal of buying your first home.

Research housing finance agencies. These agencies offer special mortgate loan programs- for low and moderate-income buyers, buyers with an interest in sprucing up a house in a particular area, and additional groups as specified by the agency. With the help of a housing finance agency, you can get an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies can assist eligible homebuyers with a lower rate of interest, help with your down payment, and provide other benefits. The main mission of not-for-profit housing finance agencies is promoting the purchase of homes in certain places.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income individuals qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to qualify for home financing. FHA assists first-time buyers and others who would not be able to qualify for a conventional loan by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA loan are typically the current interest rate, while the down payment amounts with an FHA mortgage will be less than those of conventional loans. The down payment may be as low as 3 percent while the closing costs could be financed in the mortgage loan.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a reasonable fixed interest rate, no down payment, and minimal closing costs. Although the mortgages aren't actually provided by the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Generally the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you part of his own equity to help you with your down payment funds. You would borrow the majority of the purchase price from a traditional lender and finance the remaining amount with the seller. Typically, this kind of second mortgage has a higher rate of interest.

The satisfaction will be the same, no matter how you manage to come up with your down payment. Your new home will be well worth it!

Need to talk about down payment options? Give us a call at 4078987559.