Putting Together Your Down Payment

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Many buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new house, but aren't sure how you should put together a down payment?

Tighten your belt and save. Look for ways you can reduce your expenses to save toward a down payment. You could also try enrolling in an automatic savings plan to have a percentage of your pay automatically moved into your savings account. Some effective approaches to build up funds include moving into housing that is less expensive, and staying home for your family vacation for a year or two.

Sell things you do not need and find a second job. Maybe you can get an additional job to get your down payment money. You can also get creative about the things you can put up for sale. Maybe you have desirable items you can sell at an online auction, or quality household goods for a garage or tag sale. You can also look into what your investments will bring if sold.

Tap into your retirement funds. Investigate the parameters of your specific plan. Some homebuyers get down payment money from withdrawing what they need from their IRAs or taking money out of 401(k) programs. You will need to ensure you are knowledgeable about any penalties, the effect this will have on your income taxes, and repayment terms.

Ask for help from generous family members. Many homebuyers are sometimes lucky enough to get down payment help from caring family members who may be able to help get them in their first home. Your family members may be eager to help you reach the goal of having your own home.

Research housing finance agencies. These types of agencies provide special mortgage loan programs- for moderate and low income homebuyers, buyers with an interest in sprucing up a house within a specific part of the city, and additional groups as defined by each agency. With the help of a housing finance agency, you probably will be given an interest rate that is below market, down payment assistance and other perks. These types of agencies can assist eligible buyers with a lower interest rate, get you your down payment, and offer other assistance. The main purpose of not-for-profit housing finance agencies is to boost residence ownership in specific places.

Explore no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income families get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting home financing. FHA helps first-time homebuyers and others who would not be eligible for a traditional mortgage by themselves, by offering mortgage insurance to the private lenders. Down payment totals for FHA mortgages are below those of traditional mortgage loans, even though these mortgages have average rates of interest. Closing costs can be financed in the mortgage, while your down payment might be as low as 3 percent of the total.

• VA loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a competitive fixed interest rate, no down payment, and limited closing costs. While it's true that the loans don't originate from the VA, the department verifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, while the first mortgage covers 80 percent. Instead of 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 part of the seller's home equity.. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lending institution and finance the remainder with the seller. Typically, this kind of second mortgage will have a higher rate of interest.

Need to talk about down payment options? Give us a call: (203) 284-8022.