Putting Together Your Down Payment

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Lots of borrowers qualify for a loan, but they don't have a lot of cash to put up a down payment. Start here

Reduce expenses and save.

Look for ways to trim your monthly expenditures to set aside money for a down payment. You might also decide to enroll in an automatic savings plan at your bank to have a portion of your pay automatically deposited into your savings account. Some practical methods to save additional funds include moving into a residence that is less expensive, and staying home for your vacation for a year or two.

Sell things you do not really need and find a part-time job.

Perhaps you can find a second job to get your down payment money. In addition, you can make a comprehensive list of things you may be able to sell. Unworn gold jewelry can be sold at local jewelers. Maybe you have desirable items you can sell at an online auction, or quality household goods for a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from a retirement plan.

Check the provisions of your specific program. You can borrow funds from a 401(k) plan for you down payment or perform a withdrawal from an IRA. Be sure you are clear about any penalties, the effect this could have on your taxes, and repayment terms.

Ask for assistance from members of your family.

First-time buyers are often lucky enough to receive help with their down payment assistance from gracious family members who may be able to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your own home.

Learn about housing finance agencies.

These agencies provide special mortgage programs to moderate and low income buyers, buyers interested in remodeling a residence within a targeted area, and additional groups as defined by the finance agency. Financing with this type of agency, you probably will receive an interest rate that is below market, down payment assistance and other advantages. These types of agencies can assist eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other benefits. The primary purpose of not-for-profit housing finance agencies is boosting the purchase of homes in particular parts of the city.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low to moderate-income buyers get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to qualify for mortgages. FHA offers mortgage insurance to the private lenders, making the buyers eligible for a mortgage. Interest rates with an FHA mortgage are typically the going interest rate, but the down payment for an FHA mortgage will be smaller than those of conventional loans. The down payment can be as low as 3 percent and the closing costs may be covered by the mortgage loan.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a reasonable interest rate, no down payment, and minimal closing costs. Even though the VA does not actually issue the mortgages, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    You can finance your down payment through a second mortgage that closes with the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually this kind of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter how you manage to pull together the down payment. Your brand new home will be well worth it!

Want to discuss down payment options?
Call us at 801-413-4570.