Your Down Payment

Many borrowers qualify for various loan programs, but they don't have much to put up a down payment. Here are a few tips:

Slash the budget and build up savings. Scrutinize your budget to uncover extra money to save for your down payment. Also, you can look into bank programs in which some of your paycheck is automatically deposited into a savings account every pay period. You would be wise to look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a family vacation.

Work more and sell items you do not need. Perhaps you can get a second job and build up your earnings. You can also get creative about the items you can put up for sale. Multiple small items might add up to a fair amount at a garage or tag sale. You can also look into what your investments may bring if sold.

Borrow from your retirement plan. Research the specifics of your particular plan. It is possible to take out money from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. Be sure you understand about any penalties, the effect this could have on your income taxes, and repayment terms.

Ask for help from family members. Many buyers somtimes receive help with their down payment assistance from giving parents and other family members who may be prepared to help get them in their first home. Your family members may be pleased at the chance to help you reach the milestone of buying your own home.

Research housing finance agencies. Special mortgage programs are offered to buyers in specific circumstances, like low income buyers or homebuyers planning to improve houses in a certain area, among others. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies may help you with a lower rate of interest, get you your down payment, and provide other assistance. These non-profit agencies exist to boost home ownership in certain areas.

Learn about low-down and no-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 families get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who may not be able to qualify for a traditional loan on their own, by offering mortgage insurance to lenders. Interest rates for an FHA mortgage are usually the going interest rate, while the down payment amounts with an FHA mortgage are lower than those of conventional loans. The down payment may go as low as 3 percent while the closing costs could be included in the mortgage loan.

  • VA loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a competitive interest rate, no down payment, and limited closing costs. Although the mortgage loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment through a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. Rather than the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. You would borrow the largest portion of the purchase price from a traditional mortgage lender and finance the remainder with the seller. Typically, this form of second mortgage will have higher interest.

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

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

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