Building Your Down Payment

Many buyers qualify for a mortgage loan, but they can't afford a large down payment. Get started here

Tighten your belt and save. Be on the look-out for ways you can reduce your expenses to set aside funds for a down payment. There are bank programs through which some of your take-home pay is automatically deposited into a savings account every pay period. You would be wise to look into some big expenses in your spending history that you can live without, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Sell items you don't really need and find a second job. Try to find a second job. This can be exhausting, but the temporary trial can help you get your down payment. In addition, you can make a comprehensive list of items you may be able to sell. Unworn gold jewelry can be sold at local jewelers. A closetful of small things might add up to a nice sum at a garage or tag sale. You could also look into what any investments you hold could bring if sold.

Tap into your retirement funds. Research the specifics for your particular plan. Many people get down payment money by withdrawing what they need from IRAs or borrowing from their 401(k) programs. Be sure you are clear about any penalties, the way this will affect on your taxes, and repayment terms.

Request a gift from your family. First-time buyers are sometimes fortunate enough to get down payment help from giving parents and other family members who may be prepared to help get them in their own home. Your family members may be pleased at the chance to help you reach the goal of owning your first home.

Research housing finance agencies. Provisional loan programs are provided to buyers in certain circumstances, such as low income homebuyers or buyers planning to renovating houses in a certain part of town, among others. Working with this kind of agency, you probably will be given an interest rate that is below market, down payment help and other incentives. These types of agencies can help eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other benefits. These non-profit agencies to boost community in specific areas.

Research no-down and low-down mortgage loans.

• FHA loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income Americans qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling new homebuyers who might not be eligible for a conventional mortgage loan, to get home financing. Down payment amounts for FHA loans are lower than those for traditional mortgage loans, although these loans have average rates of interest. Closing costs might be included in the mortgage, and your down payment could be as low as 3% of the purchase price.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan requires no down payment, has limited closing costs, and provides the advantage of a competitive interest rate. While it's true that the loans are not actually provided by the VA, the office certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

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

Need to talk about down payment options? Call us at 9254610500.