Your Down Payment

Many people who are looking to purchase a new home can qualify for several different kinds of mortgages, but they don't have a lot of money to put up the standard down payment. Here's where to get started

Tighten your belt and save. Be on the look-out for ways you can trim your monthly expenditures to put away money for a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically deposited into savings 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 decide to move into less expensive housing, or skip a family vacation.

Sell items you do not really need and get a part-time job. Try to find a second job. This can be rough, but the temporary trial can help you get your down payment. You can also get creative about the items you may be able to sell. A closetful of small items may add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you hold.

Tap into your retirement funds. Investigate the parameters of your specific program. Some people get down payment money by withdrawing what they need from IRAs or borrowing from their 401(k) plans. Be sure you are knowledgable about any penalties, the effect this could have on income taxes, and repayment terms.

Ask for help from generous family members. Many buyers somtimes get down payment assistance from thoughtful 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 goal of having your first home.

Learn about housing finance agencies. These types of agencies extend special mortgage loans to moderate and low income borrowers, buyers with an interest in rehabilitating a home within a specific area, and additional certain kinds of buyers as defined by the agency. Financing through this type of agency, you probably will be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies can help you with a reduced interest rate, help with your down payment, and provide other advantages. The primary goal of not-for-profit housing finance agencies is boosting the purchase of homes in particular areas.

Research no-down and low-down mortgages.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low to moderate-income families get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who may not be able to qualify for a typical loan on their own, by offering mortgage insurance to the private lenders. Interest rates with an FHA loan are typically the market interest rate, but the down payment with an FHA mortgage are below those of conventional loans. Closing costs might be covered by the mortgage, and the down payment might be as low as 3% of the purchase price.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a reasonable interest rate, no down payment, and reduced closing costs. Even though the VA doesn't actually finance the mortgages, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of putting the usual 20% down payment.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Often, this kind of second mortgage will have higher interest.

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

Need to talk about the best options for down payments? Give us a call: (718) 639-9500.

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