Your Down Payment

Lots of people who are looking to buy a new home qualify for various loan programs, but they can't afford a large down payment. Here are a few methods that will help you put together your down payment

Slash the budget and build up savings. Turn your budget upside-down to uncover extra money to save for your down payment. There are bank programs through which a portion of your paycheck is automatically placed into savings every pay period. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Work a second job and sell items you do not need. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you actually need and the items you migh be able to put up for sale. A closetful of small things may add up to a fair amount at a garage or tag sale. You can also research what your investments will bring if sold.

Borrow your down payment from a retirement plan. Check the parameters of your retirement program. It is possible to borrow funds from a 401(k) plan for a down payment or withdraw from an IRA. Be sure you are knowledgable about any penalties, the effect this could have on your income taxes, and repayment terms.

Ask for a gift from family. First-time buyers are sometimes lucky enough to receive help with their down payment assistance from thoughtful parents and other family members who are prepared to help get them in their first home. Your family members may be eager to help you reach the milestone of owning your first home.

Contact housing finance agencies. Special loan programs are given to homebuyers in specific circumstances, such as low income purchasers or people looking to renovating homes in a particular area, among others. With the help of a housing finance agency, you probably will get a below market interest rate, down payment help and other perks. Housing finance agencies may help you with a lower interest rate, help with your down payment, and provide other assistance. These non-profit agencies exist to build up the value of homes in particular places.

Learn about low-down and no-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low to moderate-income Americans get mortgage loans. 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 the private lenders, ensuring the buyers are eligible for a home loan. Down payment requirements for FHA loans are smaller than those of conventional mortgage loans, even though these mortgages come with average rates of interest. Closing costs may be financed within the mortgage, while the down payment may be as low as 3 percent of the purchase price.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and provides the advantage of a competitive rate of interest. Although the mortgage loans aren't actually financed by the VA, the department verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In the case of a seller "carrying back a second mortgage," the seller loans you part of his or her home equity. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Often, this kind of second mortgage has higher interest.

The feeling of accomplishment will be the same, no matter how you manage to put together the down payment. Your brand new home will be well worth it!

Need to talk about down payment options? Call us at (321) 777-7277.

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