Building Your Down Payment

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

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. There are bank programs in which some of your paycheck is automatically deposited into savings every pay period. You might look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your family vacation.

Sell things you do not really need and get a part-time job. Try to find an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can make a comprehensive inventory of items you can sell. Broken gold jewelry can be sold at local jewelers. A closetful of small items could add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow money from your retirement plan. Check the parameters of your specific plan. It is possible to take out money from a 401(k) plan for a down payment or make a withdrawal from an IRA. You will need to ensure you are clear about any penalties, the effect this could have on income taxes, and repayment obligation.

Ask for help from generous members of your family. Many buyers somtimes receive down payment help from gracious family members who may be willing to help get them in their own home. Your family members may be inclined to help you reach the milestone of buying your own home.

Learn about housing finance agencies. Special mortgage programs are given to homebuyers in specific situations, like low income buyers or future homeowners looking to renovating houses in a certain area, among others. With the help of this kind of agency, you probably will be given a below market interest rate, down payment help and other perks. Housing finance agencies can help you with a lower rate of interest, get you your down payment, and provide other assistance. These non-profit programs to promote home ownership in certain neighborhoods.

Explore no-down and low-down mortgage loan programs.

• 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 to moderate-income individuals qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling homebuyers who may not qualify for a traditional mortgage loan, to receive home financing. Down payment amounts for FHA loans are below those with typical mortgage loans, even though these mortgages have average rates of interest. Closing costs might be financed in the mortgage, and the down payment can be as low as 3% of the purchase price.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan requires no down payment, has limited closing costs, and provides a competitive rate of interest. While the mortgage loans don't originate from the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you a piece of his own equity to help you get your down payment money. You would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Usually this type of second mortgage has a higher rate of interest.

No matter how you gather your down payment, the satisfaction of owning your own home will be just as sweet!

Need to talk about down payment options? Call us at 5122916100.