Building Your Down Payment

Many people who would like to purchase a new house qualify for a loan, but they can't afford a large down payment. Below are a few ways to get together a down payment

Tighten your belt and save. Look for ways to reduce your expenses to set aside money for a down payment. You might also decide to enroll in an automatic savings plan to automatically have a specific portion of your paycheck moved into savings. Some effective strategies to put together funds include moving into a residence that is less expensive, and staying local for your vacation for a year or two.

Sell items you don't really need and get a second job. Maybe you can get an additional job and build up your earnings. You can also get creative about the things you can sell. Multiple small things might add up to a fair amount at a garage or tag sale. You might also research what your investments may bring if sold.

Borrow money from your retirement plan. Check the provisions of your particular program. It is possible to pull out money 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 income taxes, and repayment terms.

Ask for a gift from family. Many buyers somtimes receive help with their down payment help from gracious parents and other family members who are willing to help get them in their first home. Your family members may be pleased to help you reach the milestone of owning your own home.

Contact housing finance agencies. These types of agencies offer special mortgage programs for moderate and low income homebuyers, buyers with an interest in remodeling a house in a specific part of the city, and other specific kinds of buyers as defined by each finance agency. Financing through this type of agency, you probably will be given a below market interest rate, down payment help and other incentives. These kinds of agencies may assist eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other advantages. These non-profit programs exist to build up home ownership in particular neighborhoods.

Learn about low-down and no-down mortgages.

  • 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 buyers qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to qualify for mortgage loans. FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a home loan. Down payment amounts for FHA mortgages are lower than those of conventional mortgages, even though these loans come with average interest rates. The down payment can be as low as 3 percent while the closing costs may be included in the mortgage.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people qualify for a VA loan, which generally offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. Although the VA doesn't actually issue the loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a portion of his own equity to help you with your down payment funds. You would borrow the majority of the purchase price from a traditional lender and finance the remaining amount with the seller. Usually you will pay a slightly higher rate with the loan from the seller.

No matter your strategy of putting together your down payment, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss your down payment? Call us: (973) 601-2122.

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