Your Down Payment

Lots of buyers qualify for several different kinds of mortgages, but they don't have a lot of money to pay the standard down payment. Do you want to buy a new house, but don't know how to get together your down payment?

Reduce expenses and save. Be on the look-out for ways you can reduce your expenditures to save toward a down payment. There are bank programs through which some of your take-home pay is automatically transferred into a savings account every pay period. Some effective approaches to build up funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work a second job and sell things you don't need. Maybe you can get an additional job and save your earnings. In addition, you can make a comprehensive inventory of things you can sell. Unused gold jewelry can be sold at local jewelry stores. Maybe you own collectibles you can put up for sale on an online auction, or household items for a tag or garage sale. Also, you can look into selling any investments you own.

Borrow money from a retirement plan. Explore the specifics for your particular plan. Many people get down payment money by withdrawing funds from Individual Retirement Accounts or taking money out of their 401(k) programs. Make sure to learn about the tax ramifications, repayment terms, and early withdrawal penalties.

Ask for a gift from your family. Many buyers are often lucky enough to get down payment help from thoughtful family members who are anxious to help get them in their own home. Your family members may be eager to help you reach the milestone of buying your own home.

Learn about housing finance agencies. Special mortgate loan programs are offered to buyers in certain situations, like low income buyers or future homeowners looking to improve houses in a particular area, among others. Financing through a housing finance agency, you probably will be given an interest rate that is below market, down payment assistance and other advantages. These types of agencies can assist eligible buyers with a lower interest rate, help with your down payment, and offer other advantages. The primary mission of not-for-profit housing finance agencies is to boost the purchase of homes in specific places.

Learn about low-down and no-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low to moderate-income buyers qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who would not be able to qualify for a traditional mortgage loan by themselves, by providing mortgage insurance to lenders. Down payment requirements for FHA mortgages are less than those with typical mortgages, even though these mortgages come with current rates of interest. Closing costs can be covered by the mortgage, and the down payment can be as low as 3 percent of the total.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has limited closing costs, and provides the benefit of a competitive interest rate. While the VA does not issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can finance a down payment using a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the home's price, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, rather than having to put together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you a portion of his home equity to help you with your down payment funds. You would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Generally, this type of second mortgage has a higher rate of interest.

No matter your strategy of putting together down payment funds, the thrill of reaching the goal of owning your own home will be just as sweet!

Want to discuss the best options for down payments? Give us a call: 602-369-8482.

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