Putting Together Your Down Payment

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Lots of buyers can easily qualify for several different kinds of mortgages, but they don't have much to put up the standard down payment. Here are a few tips:

Tighten your belt and save. Scrutinize your budget to uncover ways you can cut expenses to go toward your down payment. There are bank programs through which some of your paycheck is automatically deposited into a savings account each pay period. Some practical methods to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.

Work a second job and sell items you do not need. Try to get an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you really need and the items you could be able to put up for sale. Maybe you own desirable items you can sell on an online auction, or household items for a tag or garage sale. You could also look into what any investments you own will sell for.

Borrow from your retirement funds. Explore the specifics for your particular plan. Many homebuyers get down payment money by withdrawing what they need from IRAs or getting funds out of their 401(k) plans. Be sure to learn about the tax consequences, your obligation for repaying the money, and possible early withdrawal penalties.

Ask for assistance from members of your family. First-time homebuyers are sometimes lucky enough to get down payment assistance from caring family members who may be able to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Provisional loan programs are provided to buyers in specific situations, such as low income purchasers or people planning to renovating homes in a particular neighborhood, among others. With the help of a housing finance agency, you can receive a below market interest rate, down payment assistance and other advantages. These types of agencies may assist eligible homebuyers with a reduced interest rate, get you your down payment, and provide other benefits. The principal goal of not-for-profit housing finance agencies is to promote residence ownership in certain areas.

Learn about low-down and no-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 a critical part in assisting low to moderate-income buyers qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get home financing. FHA assists first-time buyers and others who might not be able to qualify for a conventional mortgage on their own, by offering mortgage insurance to the private lenders. Interest rates with an FHA loan usually feature the current interest rate, while the down payment with an FHA mortgage will be lower than those of conventional loans. Closing costs might be covered by the mortgage, and the down payment could be as low as 3% of the purchase price.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. Even though the VA does not provide the mortgages, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Most of the time, the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The borrower covers the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her equity. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remaining amount from the seller. Often, this type of second mortgage will have higher interest.

No matter how you gather your down payment funds, the thrill of reaching the goal of owning your own home will be just as sweet!

Need to talk about down payment options? Give us a call at (949) 770-6067.