Putting Together Your Down Payment

Many borrowers can easily qualify for a loan, but they can't afford a large down payment. Do you want to buy a new home, but aren't sure how to put together a down payment?

Slash your budget and build up savings. Turn your budget upside-down to discover ways you can cut expenses to go toward your down payment. You also could enroll in an automatic savings plan to have a percentage of your payroll automatically moved into a savings account. Some effective strategies to save additional funds include moving into less expensive housing, and staying home for your family vacation this year.

Work more and sell items you don't need. Perhaps you can find an additional job and build up your earnings. Additionally, you can make a comprehensive list of things you can sell. Unworn gold jewelry can bring a good amount from local jewelry stores. Maybe you own collectibles you can put up for sale on an auction website, or household goods for a garage or tag sale. You can also research what your investments will sell for.

Borrow from your retirement funds. Research the specifics of your individual plan. You can borrow funds from a 401(k) for you down payment or withdraw from an IRA. Make sure to learn about the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for a generous gift from family. First-time buyers are often lucky enough to get down payment assistance from giving family members who are anxious to help them get into their first home. Your family members may be pleased to help you reach the goal of having your first home.

Learn about housing finance agencies. Special loan programs are given to homebuyers in certain situations, like low income purchasers or homebuyers looking to renovating houses in a certain area, among others. With the help of this kind of agency, you probably will get a below market interest rate, down payment assistance and other benefits. These kinds of agencies may assist eligible homebuyers with a lower rate of interest, get you your down payment, and offer other advantages. The main mission of not-for-profit housing finance agencies is to promote the purchase of homes in particular areas.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgages. FHA assists first-time homebuyers and others who would not be able to qualify for a typical mortgage loan on their own, by providing mortgage insurance to private lenders. Down payment totals for FHA mortgages are lower than those for traditional mortgage loans, although these loans have current interest rates. The down payment may be as low as 3 percent while the closing costs may be covered by the mortgage loan.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. Even though the VA doesn't provide the loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You can finance a down payment through a second mortgage that closes along with the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you a portion of his home equity to help you with your down payment money. You would finance the largest portion of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Often, this type of second mortgage will have higher interest.

The satisfaction will be the same, no matter how you manage to get together your down payment. Your new home will be well worth it!

Want to discuss your down payment? Call us at 954.920.9799.

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