Putting Together Your Down Payment

Lots of buyers qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Below are a few straightforward ways to put together a down payment

Slash the budget and build up savings. Be on the look-out for ways to trim your monthly expenses to put away money for a down payment. You also could enroll in an automatic savings plan at your bank to automatically have a set portion of your take-home pay moved into savings. You would be wise to 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 may move into less expensive housing, or skip a vacation.

Sell things you do not really need and find a second job. Try to get an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you actually need and the things you could be able to put up for sale. Maybe you own collectibles you can put up for sale at an online auction, or household goods for a garage or tag sale. Also, you might want to look into selling any investments you hold.

Tap into your retirement funds. Investigate the parameters of your specific plan. Some people get down payment money from withdrawing funds from IRAs or getting funds out of their 401(k) plans. Make sure to learn about the tax consequences, repayment terms, and any penalties for withdrawing early.

Ask for assistance from members of your family. First-time buyers are often lucky enough to get down payment assistance from gracious family members who are eager to help get them in their own home. Your family members may be pleased at the chance to help you reach the milestone of having your first home.

Learn about housing finance agencies. Special loan programs are extended to homebuyers in specific situations, like low income homebuyers or homebuyers planning to renovating houses in a specific part of town, among others. Working through a housing finance agency, you may receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can help eligible buyers with a lower rate of interest, get you your down payment, and provide other assistance. The central goal of not-for-profit housing finance agencies is boosting the purchase of homes in targeted parts of the city.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low and moderate-income buyers get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Interest rates with an FHA mortgage are generally the going interest rate, but the down payment with an FHA mortgage are below those of conventional loans. Closing costs may be included in the mortgage, and your down payment can be as low as 3 percent of the total.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people qualify for a VA loan, which typically offers a competitive fixed interest rate, no down payment, and minimal closing costs. Even though the mortgages don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You may finance a down payment through a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's price, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

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

The satisfaction will be the same, no matter which strategy you use to get together your down payment. Your brand new home will be worth it!

Need to talk about your down payment? Call us: (512) 291-6100.

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