Building Your Down Payment

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

Cut expenses and save. Be on the look-out for ways you can reduce your expenditures to set aside funds for a down payment. There are bank programs in which a portion of your paycheck is automatically placed into savings every pay period. You could look into some big expenses in your budget that you can live without, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your vacation.

Sell things you do not really need and get a part-time job. Perhaps you can find a second job and build up your earnings. Additionally, you can make a comprehensive inventory of things you can sell. Broken gold jewelry can be sold at local jewelers. Maybe you own collectibles you can sell at an auction website, or household goods for a garage or tag sale. You could also research what any investments you hold may bring if sold.

Borrow funds from your retirement plan. Explore the specifics for your individual plan. You can borrow money from a 401(k) plan for a down payment or withdraw from an IRA. Be sure you know about any penalties, the effect this could have on your taxes, and repayment obligation.

Ask for a generous gift from family. Many buyers somtimes get help with their down payment assistance from gracious family members who may be eager to help get them in their own home. Your family members may be inclined to help you reach the goal of buying your first home.

Contact housing finance agencies. These types of agencies provide special mortgage loans for low and moderate-income buyers, buyers with an interest in renovating a house in a targeted area, and other groups as specified by the finance agency. Financing with this type of agency, you probably will get an interest rate that is below market, down payment help and other incentives. Housing finance agencies can help you with a lower rate of interest, help with your down payment, and provide other advantages. These non-profit programs were established to boost community in certain areas.

Research no-down and low-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting home financing. FHA aids first-time homebuyers and others who may not be able to qualify for a traditional mortgage by themselves, by providing mortgage insurance to the private lenders. Interest rates with an FHA mortgage normally feature the market interest rate, while the down payment for an FHA mortgage will be below those of conventional loans. Closing costs may be financed within the mortgage, and the down payment can be as low as 3% of the total.

• VA mortgages

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. Even though the VA doesn't actually finance the loans, it does certify eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can fund your down payment using a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, instead of needing to pull together the typical 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher interest rate with the loan financed by the seller.

No matter your strategy of pulling together your down payment money, the thrill of living in your own home will be just as sweet!

Need to talk about your down payment? Call us at 866-300-1550.