Putting Together Your Down Payment

Lots of buyers can qualify for several different kinds of mortgages, but they don't have a lot of money to pay a down payment. Here are a few tips:

Slash your budget and build up savings. Turn your budget upside-down to find extra money to go toward your down payment. You also might enroll in an automatic savings plan to automatically have a predetermined amount from your take-home pay transferred into a savings account. You could look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay local for your vacation.

Work a second job and sell items you don't need. Try to find an additional job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can put together a comprehensive inventory of items you may be able to sell. Unworn gold jewelry can be sold at local jewelers. Multiple small items can add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow from your retirement plan. Research the details for your individual plan. It is possible to take out money from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you comprehend the tax ramifications, repayment terms, and any penalties for withdrawing early.

Request a generous gift from family. Many homebuyers are often fortunate enough to receive help with their down payment help from giving parents and other family members who may be prepared to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your first home.

Learn about housing finance agencies. These types of agencies provide special mortgage programs for low and moderate-income borrowers, buyers interested in remodeling a house in a targeted area, and other groups as defined by the finance agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other perks. These types of agencies may assist eligible buyers with a reduced rate of interest, help with your down payment, and provide other advantages. The central mission of not-for-profit housing finance agencies is to boost the purchase of homes in targeted parts of the city.

Find out about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low to moderate-income individuals qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to qualify for home financing. FHA offers mortgage insurance to the private lenders, helping the buyers to become eligible for a loan. Interest rates for an FHA loan normally feature the going interest rate, but the down payment with an FHA mortgage are below those of conventional loans. The down payment may be as low as 3 percent and the closing costs could be financed in the mortgage loan.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which generally offers a low fixed rate of interest, no down payment, and reduced closing costs. Although the VA does not finance the loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you a portion of his home equity to assist you with your down payment money. You would finance the majority of the purchase price with a traditional lender and borrow the remaining amount from the seller. Often, this form of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your new home will be well worth it!

Want to discuss down payment options? Call us: 954.920.9799.

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