Your Down Payment

Many buyers qualify for various loan programs, but they can't afford a large down payment. Here's how you can prepare for your down payment.

Cut expenses and save. Be on the lookout for ways to trim your expenditures to set aside money for a down payment. You also could enroll in an automatic savings plan to automatically have a specific amount from your paycheck transferred into a savings account. Some practical approaches to put together funds include moving into housing that is less expensive and staying local for your vacation for a year or two.

Work a second job and sell items you don't need. Perhaps you can find an additional job to get your down payment money. You can also get serious about the possessions you really need and the items you might be able to put up for sale. A closet full of small things might add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Tap into your retirement funds. Check the provisions of your retirement plan. You can borrow money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. You will want to ensure you are knowledgeable about any penalties, the effect this will have on taxes, and repayment obligation.

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

Research housing finance agencies. These types of agencies extend provisional mortgage loan programs to low and moderate-income borrowers, buyers interested in renovating a house within a targeted area, and other particular kinds of buyers as defined by each finance agency. Working with a housing finance agency, you can be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies may assist you with a lower rate of interest, get you your down payment, and offer other assistance. The central purpose of not-for-profit housing finance agencies is promoting residence ownership in specific areas.

Research no-down and low-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low and moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA offers mortgage insurance to private lenders, enabling new homebuyers who will not be eligible for a traditional loan, to obtain financing. Interest rates for an FHA mortgage usually feature the going interest rate, while the down payment amounts with an FHA mortgage will be lower than those of conventional loans. The required down payment may go as low as three percent while the closing costs can be covered by the mortgage.

  • VA Loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan requires no down payment, has minimal closing costs, and provides a competitive interest rate. Even though the VA does not 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 you close along with the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than having to pull together the usual 20% down payment.

  • Carry-back Loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Usually you will pay a somewhat higher rate on the loan from the seller.

No matter how you gather your down payment, the satisfaction of owning your own home will be just as great!

Need to talk about your down payment? Call us: 973.249.7878.