Your Down Payment

Lots of borrowers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Get started here

Slash your budget and build up savings. Be on the look-out for ways to trim your monthly expenses to set aside funds for a down payment. There are bank programs in which some of your take-home pay is automatically transferred into a savings account each pay period. You would be wise to look into some big expenses in your budget that you can live without, or trim, at least temporarily. For example, you might move into less expensive housing, or stay local for your annual vacation.

Work a second job and sell things you do not need. Try to find a second job. This can be rough, but the temporary difficulty can help you get your down payment. In addition, you can put together an exhaustive inventory of items you can sell. Unworn gold jewelry can bring a good amount from local jewelers. Maybe you own collectibles you can put up for sale on an auction website, or household goods for a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow funds from your retirement plan. Research the specifics for your individual plan. It is possible to take out funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. You will need to make sure you are clear about any penalties, the effect this will have on your taxes, and repayment obligation.

Ask for a gift from family. Many buyers are often fortunate enough to receive down payment assistance from giving family members who may be anxious to help get them in their own home. Your family members may be inclined to help you reach the goal of buying your first home.

Learn about housing finance agencies. Special mortgage loans are offered to buyers in specific situations, like low income buyers or future homeowners planning to renovating homes in a targeted area, among others. With the help of a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other perks. Housing finance agencies can help you with a lower rate of interest, get you your down payment, and provide other assistance. These non-profit programs were formed to boost the value of homes in specific neighborhoods.

Research no-down and low-down mortgages.

• 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 an important role in aiding low to moderate-income families qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get mortgages. FHA aids first-time homebuyers and others who would not be eligible for a conventional loan by themselves, by providing mortgage insurance to the private lenders. Interest rates with an FHA loan are usually the going interest rate, while the down payment for an FHA loan are less than those of conventional loans. Closing costs can be included in the mortgage, while your down payment might be as low as 3 percent of the total amount.

• VA loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a competitive fixed interest rate, no down payment, and reduced closing costs. Although the mortgage loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to lend you a portion of his home equity to help you get your down payment funds. 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 form of second mortgage will have a higher rate of interest.

Need to talk about the best options for down payments? Give us a call at 3149139678.