Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Here's where to get started

Slash the budget and build up savings. Turn your budget upside-down to uncover ways you can cut expenses to go toward your down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a predetermined amount from your take-home pay transferred into a savings account. You might look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a vacation.

Work a second job and sell things you don't need. Maybe you can find an additional job and save your earnings. You can also get serious about the possessions you really need and the items you can put up for sale. Multiple small things may add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.

Borrow funds from your retirement plan. Check the provisions of your retirement program. Many people get down payment money by withdrawing from their Individual Retirement Accounts or borrowing from 401(k) plans. Make sure you understand about any penalties, the effect this may have on your income taxes, and repayment terms.

Ask for a generous gift from family. First-time buyers are sometimes fortunate enough to get down payment help from giving family members who are prepared to help them get into their first home. Your family members may be pleased at the chance to help you reach the goal of buying your first home.

Contact housing finance agencies. These types of agencies offer provisional loan programs for low and moderate-income homebuyers, buyers with an interest in remodeling a house within a targeted part of the city, and additional groups as specified by the finance agency. Financing through a housing finance agency, you may get an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies may help you with a lower rate of interest, help with your down payment, and offer other benefits. The principal mission of non-profit housing finance agencies is build up residence ownership in particular parts of the city.

Learn about low-down and no-down mortgage loans.

• 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 role in aiding low and moderate-income individuals qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to get mortgages. FHA aids first-time homebuyers and others who would not be eligible for a typical mortgage loan on their own, by offering mortgage insurance to private lenders. Interest rates for an FHA loan are usually the market interest rate, but the down payment with an FHA mortgage will be smaller than those of conventional loans. The required down payment can be as low as 3 percent and the closing costs could be covered by the mortgage.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan requires no down payment, has limited closing costs, and provides the advantage of a competitive rate of interest. Although the VA doesn't actually provide the mortgages, it does certify eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can finance a down payment using a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Often, this form of second mortgage will have higher interest.

Need to talk about the best options for down payments? Call us at 866-300-1550.