Building Your Down Payment

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Lots of borrowers qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up the standard down payment. Here's where to get started

Tighten your belt and save. Look for ways to trim your expenditures to put away money for a down payment. There are bank programs through which some of your paycheck is automatically placed into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a family vacation.

Sell items you don't really need and find a second job. Maybe you can get an additional job to get your down payment money. In addition, you can put together an exhaustive inventory of things you may be able to sell. Broken gold jewelry can bring a good amount from local jewelers. Maybe you have desirable items you can sell on an online auction, or household items for a tag or garage sale. You could also explore what any investments you have will sell for.

Borrow from your retirement funds. Investigate the parameters of your particular plan. Many people get down payment money from withdrawing funds from their Individual Retirement Accounts or pulling money out of 401(k) programs. You will need to ensure you are knowledgeable about any penalties, the effect this may have on income taxes, and repayment obligation.

Ask for a generous gift from family. Many homebuyers sometimes receive help with their down payment assistance from gracious parents and other family members who may be prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of having your first home.

Contact housing finance agencies. Special mortgage loan programs are extended to buyers in specific circumstances, like low income homebuyers or future homeowners looking to improve houses in a certain part of town, among others. Financing through this type of agency, you can receive a below market interest rate, down payment assistance and other benefits. These kinds of agencies can assist eligible homebuyers with a reduced rate of interest, get you your down payment, and offer other assistance. The primary purpose of not-for-profit housing finance agencies is promoting the purchase of homes in particular parts of the city.

Explore no-down and low-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income Americans qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Down payment totals for FHA loans are below those for typical mortgages, even though these loans come with current interest rates. Closing costs can be financed within the mortgage, and the down payment might be as low as 3 percent of the total.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can qualify for a VA loan, which generally offers a competitive interest rate, no down payment, and limited closing costs. While the VA does not actually issue the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Generally 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 putting the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow a portion of the seller's home equity.. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically, this form of second mortgage has a higher rate of interest.

The satisfaction 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!

Need to talk about down payments? Give us a call at (209) 357-7000.

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