Your Down Payment

Many people who would like to buy a new home can qualify for various loan programs, but they don't have a lot of money to put up a down payment. Here are a few ideas:

Tighten your belt and save. Turn your budget inside out to find extra money to save for your down payment. Also, you can look into bank programs in which a portion of your paycheck is automatically transferred into savings every pay period. Some effective ways to put together funds include moving into housing that is less expensive, and skipping a year's vacation.

Sell items you do not really need and get a part-time job. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also seriously consider the possessions you actually need and the things you can sell. Multiple small items may add up to a nice sum at a garage or tag sale. You can also research what your investments could bring if sold.

Tap into your retirement funds. Research the specifics for your individual plan. Many homebuyers get down payment money by withdrawing from their IRAs or getting funds out of 401(k) plans. Be sure you know about any penalties, the effect this will have on your income taxes, and repayment obligation.

Request a gift from family. First-time homebuyers somtimes get help with their down payment assistance from giving parents and other family members who are able to help them get into their own home. Your family members may be willing to help you reach the goal of owning your first home.

Learn about housing finance agencies. Special mortgate loan programs are provided to buyers in certain circumstances, like low income buyers or people looking to improve houses in a targeted neighborhood, among others. Working through this type of agency, you can be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can assist you with a reduced interest rate, get you your down payment, and offer other assistance. The main purpose of non-profit housing finance agencies is to promote home ownership in particular areas.

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

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant 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) aids individuals in getting mortgage loans. FHA assists first-time buyers and others who would not be able to qualify for a typical loan on their own, by offering mortgage insurance to private lenders. Down payment amounts for FHA loans are below those with conventional mortgages, although these mortgages hold current interest rates. The required down payment may be as low as three percent while the closing costs may be covered by the mortgage.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and provides a competitive interest rate. Although the mortgages don't originate from the VA, the department certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than needing to pull together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you some of his home equity to help you get your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lending institution and borrow the remaining amount from the seller. Often, this kind of second mortgage has a higher rate of interest.

No matter how you gather your down payment money, the satisfaction of reaching the goal of owning your own home will be just as sweet!

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

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