Your Down Payment

Lots of buyers can qualify for a mortgage loan, but they don't have a lot of cash to pay the standard down payment. Here are a few methods that will help you get together your down payment

Tighten your belt and save. Be on the look-out for ways you can trim your expenditures to save toward a down payment. There are bank programs through which some of your paycheck is automatically transferred into a savings account every pay period. You might look into some big expenses in your spending history that you can live without, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Work a second job and sell things you don't need. Perhaps you can find a second job to get your down payment money. You can also get creative about the items you can sell. Multiple small items might add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you hold.

Borrow funds from your retirement plan. Explore the specifics of your particular plan. Some homebuyers get down payment money from withdrawing funds from their IRAs or taking money out of 401(k) programs. Make sure you are knowledgable about any penalties, the way this will affect on your income taxes, and repayment terms.

Request a gift from your family. Many buyers are sometimes lucky enough to get down payment assistance from gracious family members who may be able to help get them in their own home. Your family members may be inclined to help you reach the goal of having your first home.

Contact housing finance agencies. Special mortgage programs are extended to buyers in specific situations, like low income buyers or homebuyers planning to improve houses in a specific neighborhood, among others. Working through this type of agency, you probably will receive an interest rate that is below market, down payment help and other benefits. These types of agencies may assist eligible homebuyers with a lower interest rate, help with your down payment, and provide other benefits. These non-profit programs to build up community in particular areas.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low to moderate-income Americans get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a home loan. Down payment totals for FHA mortgages are below those with typical mortgage loans, although these mortgages hold average rates of interest. Closing costs can be included in the mortgage, while your down payment may be as low as 3 percent of the total amount.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can qualify for a VA loan, which usually offers a reasonable fixed rate of interest, no down payment, and reduced closing costs. Even though the VA does not finance the mortgages, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Usually the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, rather than having to put together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you a piece of his own equity to help you with your down payment money. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Often, this kind of second mortgage will have higher interest.

No matter your strategy of pulling together your down payment, the thrill of reaching the goal of living in your own home will be just as great!

Want to discuss down payments? Call us: (718) 639-9500.

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