Putting Together Your Down Payment

Lots of buyers qualify for various loan programs, but they can't afford a large down payment. Below are a few ways to put together your down payment

Cut expenses and save. Turn your budget inside out to find ways you can cut expenses to go toward your down payment. You could also decide to enroll in an automatic savings plan to automatically have a specific amount from your take-home pay deposited into your savings account. You would be wise to look into some big expenses in your budget that you can live without, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your vacation.

Work a second job and sell things you do not need. Perhaps you can find a second job and save your earnings. You can also get creative about the things you may be able to sell. Maybe you own collectibles you can put up for sale at an online auction, or quality household items for a garage or tag sale. You might also explore what any investments you own may sell for.

Borrow from retirement funds. Check the parameters of your retirement plan. You may borrow funds from a 401(k) plan for you down payment or withdraw from an IRA. Be sure to ask your plan representative about the tax ramifications, repayment terms, and any early withdrawal penalties.

Ask for help from generous family members. First-time buyers are sometimes fortunate enough to get help with their down payment help from gracious parents and other family members who may be eager to help get them in their first home. Your family members may be inclined to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Provisional mortgage programs are given to homebuyers in specific circumstances, like low income homebuyers or homebuyers looking to renovating homes in a specific area, among others. Financing with this type of agency, you can receive a below market interest rate, down payment assistance and other perks. Housing finance agencies may help you with a reduced interest rate, help with your down payment, and provide other advantages. These non-profit agencies were established to promote community in specific areas.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low and moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get mortgages. FHA helps first-time buyers and others who might not be eligible for a traditional mortgage on their own, by offering mortgage insurance to private lenders. Interest rates with an FHA loan are usually the going interest rate, while the down payment amounts with an FHA mortgage will be smaller than those of conventional loans. The required down payment can go as low as three percent while the closing costs can be covered by the mortgage loan.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a competitive rate of interest, no down payment, and minimal closing costs. While it's true that the loans don't originate from the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You may fund your down payment using a second mortgage that closes at the same time as the first. Generally the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  With a carry-back 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 kind of second mortgage will have higher interest.

Need to talk about down payments? Give us a call: 866-300-1550.