Building Your Down Payment

Many buyers can qualify for various loan programs, but they don't have a lot of cash to pay the standard down payment. Get started here

Slash the budget and build up savings. Look for ways you can reduce your expenditures to set aside money for a down payment. There are bank programs through which a portion of your paycheck is automatically placed into savings every pay period. Some practical approaches to put together funds include moving into less expensive housing, and skipping a year's vacation.

Work a second job and sell things you don't need. Perhaps you can get an additional job and build up your earnings. You can also get creative about the items you may be able to put up for sale. You may own desirable items you can sell on an auction website, or quality household goods for a tag or garage sale. You can also research what your investments could bring if sold.

Borrow your down payment from a retirement plan. Check the provisions of your specific program. Some people get down payment money from withdrawing funds from their Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure you are knowledgable about any penalties, the way this could affect on taxes, and repayment obligation.

Ask for a gift from family. First-time buyers are sometimes lucky enough to get help with their down payment assistance from thoughtful parents and other family members who are willing to help get them in their first home. Your family members may be eager to help you reach the goal of buying your own home.

Learn about housing finance agencies. These types of agencies provide special mortgage programs for low and moderate-income buyers, buyers interested in rehabilitating a house within a particular area, and additional specific kinds of buyers as specified by each finance agency. With the help of a housing finance agency, you probably will get an interest rate that is below market, down payment help and other incentives. These kinds of agencies can help eligible homebuyers with a lower rate of interest, get you your down payment, and offer other advantages. These non-profit agencies to build up community in specific areas.

Research no-down and low-down mortgage loan programs.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low and moderate-income Americans get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who may not be able to qualify for a typical mortgage loan on their own, by providing mortgage insurance to private lenders. Down payment requirements for FHA mortgages are below those for typical mortgage loans, although these loans come with average rates of interest. The required down payment can go as low as 3 percent while the closing costs might be covered by the mortgage.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan does not require a down payment, has reduced closing costs, and provides a competitive interest rate. Even though the VA doesn't issue the loans, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  You may finance a down payment using a second mortgage that closes with the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In the case of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually this form of second mortgage has a higher rate of interest.

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

Need to talk about down payments? Give us a call: 9254610500.