Putting Together Your Down Payment

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Many buyers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few straightforward methods that will help you get together a down payment

Tighten your belt and save. Be on the look-out for ways you can reduce your monthly expenditures to put away money for a down payment. You might also try enrolling in an automatic savings plan to automatically have a set portion of your take-home pay transferred into a savings account. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay local for your family vacation.

Sell items you do not need and find a part-time job. Maybe you can get a second job and save your earnings. Additionally, you can make a comprehensive inventory of items you can sell. Unused gold jewelry can be sold at local jewelry stores. You may have desirable items you can put up for sale at an auction website, or household items for a garage or tag sale. Also, you can look into selling any investments you own.

Borrow from your retirement plan. Research the specifics for your particular plan. You can borrow funds from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Make sure you know about any penalties, the way this may affect on your taxes, and repayment obligation.

Ask for assistance from family members. First-time buyers sometimes get down payment help from caring family members who are willing to help get them in their own home. Your family members may be eager to help you reach the milestone of buying your own home.

Contact housing finance agencies. These agencies offer provisional mortgage loan programs to moderate and low income homebuyers, buyers with an interest in sprucing up a house in a specific area, and other certain types of buyers as defined by each finance agency. Working through this kind of agency, you probably will receive a below market interest rate, down payment help and other incentives. Housing finance agencies can assist you with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit programs exist to build up community in certain neighborhoods.

Learn about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in qualifying for mortgage loans. FHA provides mortgage insurance to the private lenders, enabling buyers who will not qualify for a traditional mortgage loan, to receive financing. Interest rates for an FHA mortgage usually feature the current interest rate, but the down payment amounts for an FHA mortgage are less than those of conventional loans. Closing costs might be financed in the mortgage, and the down payment may be as low as 3 percent of the purchase price.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan requires no down payment, has limited closing costs, and provides the advantage of a competitive rate of interest. While the VA does not actually issue the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    You can fund a down payment through a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to loan you a piece of his home equity to help you get your down payment money. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Often, this type of second mortgage will have higher interest.

The feeling of accomplishment will be the same, no matter which method you use to put together the down payment. Your brand new home will be your reward!

Want to discuss your down payment? Give us a call at 713-370-LOAN(5626) .

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