Building Your Down Payment

Many buyers qualify for various loan programs, but they don't have a lot of cash to pay a down payment. Start here

Tighten your belt and save. Look for ways you can reduce your expenses to put away money for a down payment. You also could enroll in an automatic savings plan at your bank to have a portion of your pay automatically deposited into your savings account. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.

Sell items you don't really need and get a second job. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also seriously consider the possessions you really need and the items you could be able to sell. Maybe you own desirable items you can put up for sale on an auction website, or household goods for a tag or garage sale. Also, you might want to look into selling any investments you hold.

Borrow from your retirement plan. Check the provisions of your particular plan. Some homebuyers get down payment money by withdrawing from their IRAs or borrowing from 401(k) programs. Be sure to learn about the tax consequences, repayment terms, and possible early withdrawal penalties.

Ask for a gift from family. Many buyers are sometimes lucky enough to get help with their down payment assistance from gracious family members who are able to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your first home.

Learn about housing finance agencies. Provisional mortgate loan programs are extended to buyers in certain circumstances, such as low income homebuyers or homebuyers planning to remodel houses in a certain part of town, among others. Working with this kind of agency, you probably will be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies can assist you with a reduced rate of interest, help with your down payment, and provide other advantages. The primary goal of non-profit housing finance agencies is to promote residential ownership in specific areas.

Learn about low-down and no-down mortgages.

  • Federal Housing Administration (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 part 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 homebuyers in getting mortgage loans. FHA assists first-time buyers and others who may not be eligible for a typical mortgage loan by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA loan are generally the current interest rate, while the down payment for an FHA mortgage are lower than those of conventional loans. Closing costs may be covered by the mortgage, and the down payment could be as low as 3 percent of the total amount.

  • VA loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a low fixed interest rate, no down payment, and limited closing costs. While the mortgages are not actually provided by the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You can finance a down payment with a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the home's price, and the first mortgage covers 80 percent. Instead of the traditional 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Often, this type of second mortgage will have higher interest.

The satisfaction will be the same, no matter which approach you use to come up with the down payment. Your new home will be worth it!

Want to discuss the best options for down payments? Call us: 954.920.9799.

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