Putting Together Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where to get started

Slash the budget and build up savings. Scrutinize the budget to uncover extra money to go toward your down payment. You might also decide to enroll in an automatic savings plan to have a portion of your payroll automatically deposited into a savings account. You could look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your family vacation.

Sell things you don't need and find a second job. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get serious about the possessions you really need and the items you migh be able to sell. You may own desirable items you can sell at an auction website, or quality household goods for a tag or garage sale. You might also research what any investments you have may sell for.

Borrow money from your retirement plan. Explore the specifics for your individual plan. You can take out funds from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure you know about any penalties, the way this will affect on your taxes, and repayment terms.

Ask for help from members of your family. First-time buyers somtimes receive down payment assistance from caring parents and other family members who are willing to help get them in their own home. Your family members may be willing to help you reach the milestone of owning your first home.

Learn about housing finance agencies. Special mortgage programs are extended to homebuyers in specific situations, like low income purchasers or buyers looking to improve homes in a specific area, among others. Working with a housing finance agency, you probably will get a below market interest rate, down payment help and other benefits. Housing finance agencies can assist you with a reduced rate of interest, get you your down payment, and provide other advantages. The primary purpose of not-for-profit housing finance agencies is build up residential ownership in specific places.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in helping low to moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgage loans. FHA provides mortgage insurance to private lenders, enabling buyers who might not qualify for a conventional mortgage loan, to obtain a mortgage. Down payment amounts for FHA loans are less than those for conventional mortgage loans, even though these loans come with current rates of interest. Closing costs might be included in the mortgage, and the down payment might be as low as 3 percent of the total amount.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a low fixed rate of interest, no down payment, and minimal closing costs. Although the loans are not actually financed by the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You may fund your down payment using a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to loan you part of his own equity to assist you with your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually you will pay a somewhat higher rate on the loan from the seller.

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

Need to talk about down payments? Call us: 3149139678.

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Bob Rutledge Mortgage

Loan Officer NMLS#: 297044

New American Funding 12321 Olive Blvd, ste 150
St. Louis, MO 63141