Your Down Payment

Many buyers qualify for a loan, but they can't afford a large down payment. Want to buy a new house, but don't know how you should put together a down payment?

Slash your budget and build up savings. Turn your budget inside out to find ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a predetermined amount from your take-home pay deposited into savings. Some effective strategies to put together funds include moving into a residence that is less expensive, and staying local for your family vacation for a year or two.

Work more and sell things you do not need. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can make an exhaustive inventory of things you can sell. Unused gold jewelry can be sold at local jewelry stores. Multiple small items can add up to a fair amount at a garage or tag sale. You could also explore what any investments you own will bring if sold.

Borrow funds from a retirement plan. Investigate the provisions of your particular plan. Many people get down payment money from withdrawing funds from their Individual Retirement Accounts or getting money out of 401(k) plans. Make sure to learn about the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for a generous gift from your family. Many homebuyers are often fortunate enough to get help with their down payment assistance from giving parents and other family members who may be eager to help get them in their first home. Your family members may be happy at the chance to help you reach the milestone of owning your first home.

Contact housing finance agencies. Special loan programs are extended to homebuyers in specific situations, like low income purchasers or future homeowners planning to remodel houses in a particular area, among others. Working through this type of agency, you can receive a below market interest rate, down payment assistance and other perks. These types of agencies can assist you with a reduced rate of interest, get you your down payment, and provide other advantages. The principal purpose of non-profit housing finance agencies is to promote the purchase of homes in specific places.

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

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who would not be able to qualify for a conventional loan by themselves, by offering mortgage insurance to private lenders. Interest rates with an FHA loan are typically the current interest rate, but the down payment with an FHA loan are below those of conventional loans. Closing costs might be financed in the mortgage, and the down payment may be as low as 3 percent of the total amount.

  • VA loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which usually offers a reasonable fixed interest rate, no down payment, and reduced closing costs. While the VA doesn't actually finance the loans, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Usually the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you part of his own equity to help you with your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remaining amount from the seller. Typically you will pay a slightly higher interest rate on the loan from the seller.

The feeling of accomplishment will be the same, no matter how you manage to come up with your down payment. Your brand new home will be your reward!

Need to talk about your down payment? Call us: 954.920.9799.

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