Building Your Down Payment

Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. We have a few suggestions

Slash your budget and build up savings. Be on the look-out for ways to trim your expenditures to set aside funds for a down payment. There are bank programs through which some of your paycheck is automatically transferred into a savings account each pay period. You could look into some big expenses in your budget that you can live without, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Work more and sell things you do not need. Perhaps you can get an additional job and build up your earnings. You can also seriously consider the possessions you actually need and the items you can sell. Maybe you own collectibles you can sell at an online auction, or household items for a garage or tag sale. Also, you might want to think about selling any investments you hold.

Tap into retirement funds. Explore the specifics for your particular plan. It is possible to borrow money from a 401(k) for a down payment or get a withdrawal from an Individual Retirement Account. Be sure you comprehend the tax consequences, your obligation for repayment, and early withdrawal penalties.

Request a generous gift from your family. Many homebuyers are sometimes fortunate enough to get down payment help from caring parents and other family members who are eager 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.

Contact housing finance agencies. These agencies extend provisional loan programs to moderate and low income homebuyers, buyers interested in rehabilitating a house within a targeted part of the city, and additional specific types of buyers as defined by each finance agency. With the help of this type of agency, you probably will receive a below market interest rate, down payment assistance and other incentives. These kinds of agencies may help you with a reduced interest rate, help with your down payment, and provide other benefits. The primary purpose of non-profit housing finance agencies is boosting residence ownership in particular parts of the city.

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

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low and moderate-income individuals get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in qualifying for home financing. FHA provides mortgage insurance to the private lenders, enabling homebuyers who may not qualify for a typical mortgage loan, to obtain home financing. Down payment requirements for FHA loans are less than those of typical mortgage loans, even though these mortgages come with current rates of interest. Closing costs might be covered by the mortgage, and the down payment can be as low as 3 percent of the total.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. Although the VA doesn't finance the loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  You can finance your down payment with a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, while the first mortgage covers 80 percent. Instead of the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the you borrow part of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional lending institution and borrow the remainder from the seller. Usually you'll pay a slightly higher rate with the loan from the seller.

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

Need to talk about your down payment? Give us a call at 7193576601.