Your Down Payment

Many borrowers qualify for a mortgage loan, but they can't afford a large down payment. Start here

Tighten your belt and save. Look for ways you can reduce your expenditures to set aside funds for a down payment. Also, you can look into bank programs through which a specific portion of your take-home pay is automatically deposited into a savings account each pay period. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a family vacation.

Work a second job and sell things you don't need. Perhaps you can get a second job to get your down payment money. You can also get creative about the items you migh be able to sell. Maybe you own collectibles you can sell at an online auction, or household items for a tag or garage sale. Also, you can think about selling any investments you own.

Borrow your down payment from a retirement plan. Explore the specifics for your particular plan. Many homebuyers get down payment money by withdrawing what they need from IRAs or getting money out of 401(k) programs. Be sure you comprehend the tax ramifications, your obligation for repaying the money, and penalties for withdrawing early.

Request a generous gift from your family. Many homebuyers somtimes receive help with their down payment assistance from caring family members who are eager to help them get into their first home. Your family members may be willing to help you reach the milestone of buying your first home.

Contact housing finance agencies. Provisional mortgate loan programs are given to homebuyers in specific situations, such as low income purchasers or future homeowners planning to remodel houses in a targeted neighborhood, among others. Working through a housing finance agency, you may be given an interest rate that is below market, down payment assistance and other benefits. These types of agencies may assist eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit agencies exist to build up the value of homes in specific areas.

Learn about low-down and no-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income Americans qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in qualifying for home financing. FHA provides mortgage insurance to private lenders, helping the buyers to become eligible for a mortgage loan. Down payment sums for FHA loans are smaller than those for conventional mortgages, although these loans hold current interest rates. Closing costs can be financed in the mortgage, and the down payment can be as low as 3 percent of the total amount.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a reasonable fixed interest rate, no down payment, and limited closing costs. While the mortgages don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you part of his home equity to assist you with your down payment funds. You would borrow the largest portion of the purchase price from a traditional lender and borrow the remaining amount from the seller. Usually you will pay a slightly higher interest rate with the loan from the seller.

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

Want to discuss the best options for down payments? Give us a call at (718) 639-9500.

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