Putting Together Your Down Payment

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Lots of borrowers qualify for a loan, but they don't have a large sum of cash to put up a down payment. Below are a few straightforward methods that will help you put together your down payment

Cut expenses and save. Look for ways you can reduce your monthly expenses to put away money for a down payment. There are bank programs in which some of your take-home pay is automatically placed into savings every pay period. Some practical strategies to save additional funds include moving into a residence that is less expensive, and staying home for your vacation this year.

Work a second job and sell items you do not need. Maybe you can get a second job and build up your earnings. You can also get creative about the things you can put up for sale. Maybe you have desirable items you can put up for sale at an auction website, or quality household goods for a tag or garage sale. Also, you can look into selling any investments you own.

Borrow funds from a retirement plan. Check the parameters of your retirement plan. It is possible to borrow funds from a 401(k) plan for a down payment or withdraw from an IRA. Be sure you know about any penalties, the effect this may have on your income taxes, and repayment terms.

Ask for assistance from generous family members. First-time buyers are often fortunate enough to get down payment assistance from gracious family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the goal of buying your own home.

Contact housing finance agencies. Provisional loan programs are provided to buyers in certain circumstances, such as low income homebuyers or people planning to renovating houses in a targeted area, among others. With the help of a housing finance agency, you may be given a below market interest rate, down payment assistance and other perks. These types of agencies can help you with a reduced rate of interest, help with your down payment, and offer other advantages. The central goal of not-for-profit housing finance agencies is to promote the purchase of homes in specific areas.

Learn about low-down and no-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who may not be able to qualify for a typical mortgage loan on their own, by providing mortgage insurance to the private lenders. Down payment totals for FHA loans are less than those for conventional mortgages, although these mortgages come with current rates of interest. The down payment may go as low as three percent and the closing costs may be covered by the mortgage.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which generally offers a reasonable fixed 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 certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment using a second mortgage that closes with the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow a portion of the seller's home equity.. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Often, this type of second mortgage will have higher interest.

The feeling of accomplishment will be the same, no matter which approach you use to put together your down payment. Your brand new home will be well worth it!

Want to discuss your down payment? Give us a call at 801.999.0493.

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