Putting Together Your Down Payment

Many people who are looking to purchase a new house qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new house, but don't know how to get together your down payment?

Tighten your belt and save. Scrutinize your budget to uncover extra money to save for your down payment. Also, you can look into bank programs in which some of your take-home pay is automatically placed into a savings account every pay period. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Sell items you do not need and get a part-time job. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can put together a comprehensive list of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. Multiple small things can add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you hold.

Tap into retirement funds. Research the details of your particular plan. Many people get down payment money by withdrawing funds from IRAs or pulling funds out of their 401(k) plans. Be sure you know about any penalties, the way this could affect on income taxes, and repayment obligation.

Ask for a generous gift from your family. Many homebuyers somtimes receive help with their down payment help from gracious family members who are eager to help them get into their own home. Your family members may be eager to help you reach the goal of having your first home.

Research housing finance agencies. These agencies offer provisional mortgage loans for moderate and low income borrowers, buyers interested in remodeling a residence within a particular area, and other groups as specified by each finance agency. With the help of this type of agency, you can receive a below market interest rate, down payment help and other incentives. Housing finance agencies may help eligible buyers with a reduced rate of interest, get you your down payment, and provide other assistance. The principal mission of non-profit housing finance agencies is promoting the purchase of homes in specific parts of the city.

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

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income buyers get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who might not be eligible for a traditional mortgage on their own, by providing mortgage insurance to the lenders. Interest rates for an FHA loan are normally the going interest rate, while the down payment with an FHA mortgage are below those of conventional loans. The down payment can be as low as 3 percent and the closing costs may be included in the mortgage.

• VA loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can qualify for a VA loan, which usually offers a competitive fixed interest rate, no down payment, and limited closing costs. Even though the VA does not finance the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  You may fund your down payment using a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer finances the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a slightly higher rate on the loan financed by the seller.

No matter how you gather down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payment options? Give us a call: 866-300-1550.