Your Down Payment

Lots of folks who would like to purchase a new house qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new house, but don't know how you should get together your down payment?

Cut expenses and save. Look for ways to reduce your monthly expenses to put away money for a down payment. There are bank programs in which some of your take-home pay is automatically deposited into a savings account every pay period. Some effective strategies to build up funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Sell things you do not really need and find a second job. Perhaps you can get an additional job and build up your earnings. You can also get creative about the items you migh be able to put up for sale. Maybe you own desirable items you can put up for sale at an auction website, or quality household items for a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from retirement funds. Investigate the provisions of your retirement plan. Some homebuyers get down payment money by withdrawing funds from IRAs or borrowing from 401(k) plans. Make sure to find out about the tax ramifications, your obligation for repaying the money, and any early withdrawal penalties.

Ask for assistance from members of your family. Many buyers somtimes get down payment assistance from caring family members who are anxious to help get them in their first home. Your family members may be happy at the chance to help you reach the goal of owning your own home.

Learn about housing finance agencies. Provisional mortgage programs are given to homebuyers in specific situations, such as low income homebuyers or homebuyers looking to remodel homes in a certain part of town, among others. Financing through a housing finance agency, you may get a below market interest rate, down payment help and other advantages. These kinds of agencies may help you with a reduced interest rate, help with your down payment, and provide other assistance. These non-profit agencies were formed to promote the value of homes in particular neighborhoods.

Research no-down and low-down mortgages.

  • FHA loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low and moderate-income buyers get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who may not be eligible for a traditional mortgage by themselves, by offering mortgage insurance to private lenders. Down payment sums for FHA mortgages are below those with conventional mortgage loans, even though these loans have current rates of interest. The required down payment can go as low as 3 percent while the closing costs could be included in the mortgage loan.

  • VA mortgage loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a reasonable rate of interest, no down payment, and reduced closing costs. Even though the loans don't originate from the VA, the office verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, while the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to loan you some of his own equity to help you with your down payment money. You would borrow the majority of the purchase price from a traditional mortgage lender and borrow the remaining amount from the seller. Often, this type of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter which strategy you use to get together the down payment. Your new home will be your reward!

Want to discuss down payments? Call us at 954.920.9799.

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