Building Your Down Payment

Many borrowers qualify for various loan programs, but they can't afford a large down payment. Here are a few straightforward ways to get together a down payment.

Reduce expenses and save. Look for ways you can trim your expenses to put away money for a down payment. You may also decide to enroll in an automatic savings plan to have a percentage of your payroll automatically deposited into a savings account. Some effective strategies to build up funds include moving into housing that is less expensive, and staying home for your vacation this year.

Borrow from retirement funds. Explore the details for your particular plan. It is possible to pull out funds from a 401(k) plan for a down payment or withdraw from an IRA. Be sure you understand about any penalties, the effect this could have on taxes, and repayment obligation.

Ask for a generous gift from your family. First-time buyers somtimes get down payment assistance from caring family members who are eager to help get them in their own home. Your family members may be willing to help you reach the goal of having your own home.

Contact housing finance agencies. Special mortgage programs are provided to buyers in certain circumstances, like low income buyers or people planning to improve homes in a particular part of town, among others. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may assist eligible buyers with a lower rate of interest, get you your down payment, and offer other benefits. These non-profit programs exist to boost the value of homes in certain places.

Learn about low-down and no-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income individuals qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages. FHA offers mortgage insurance to private lenders, enabling homebuyers who may not qualify for a conventional mortgage loan, to obtain a mortgage. Down payment totals for FHA mortgages are smaller than those for traditional mortgages, although these mortgages hold average interest rates. Closing costs can be included in the mortgage, while your down payment may be as low as 3% of the purchase price.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. While the mortgages don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment through a second mortgage that closes along with the first. Most of the time, the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to loan you a portion of his own equity to assist you with your down payment money. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Generally, this form of second mortgage has higher interest.

No matter your method of pulling together your down payment money, the satisfaction of reaching the goal of owning your own home will be just as great!

Need to talk about your down payment? Give us a call at 410-404-4875.

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