Building Your Down Payment

Lots of buyers can qualify for a loan, but they don't have much to pay the standard down payment. Want to buy a new house, but aren't sure how to get together your down payment?

Slash the budget and build up savings. Scrutinize your budget to uncover extra money to go toward your down payment. You could also decide to enroll in an automatic savings plan at your bank to have a portion of your payroll automatically transferred into a savings account. You might look into some big expenses in your budget 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 a second job and sell items you do not need. Look for an additional job. This can be rough, but the temporary difficulty can provide your down payment money. In addition, you can make a comprehensive list of things you may be able to sell. Broken gold jewelry can be sold at local jewelers. Multiple small things could add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you own.

Borrow from a retirement plan. Check the provisions of your particular program. It is possible to take out funds from a 401(k) plan for a down payment or withdraw from an IRA. Make sure you understand about any penalties, the way this will affect on income taxes, and repayment terms.

Ask for assistance from members of your family. Many buyers are often lucky enough to get down payment assistance from gracious family members who are able to help get them in their first home. Your family members may be pleased at the chance to help you reach the milestone of having your first home.

Research housing finance agencies. These agencies provide provisional mortgage programs for moderate and low income borrowers, buyers with an interest in remodeling a home within a particular part of the city, and additional certain kinds of buyers as specified by the finance agency. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other benefits. These kinds of agencies can assist eligible buyers with a reduced rate of interest, get you your down payment, and provide other benefits. The main goal of non-profit housing finance agencies is to boost the purchase of homes in targeted areas.

Explore no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income families get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get home financing. FHA offers mortgage insurance to the private lenders, enabling buyers who will not be eligible for a conventional loan, to get a mortgage. Down payment totals for FHA mortgages are smaller than those for traditional mortgage loans, although these mortgages hold current rates of interest. Closing costs can be financed within the mortgage, and your down payment might be as low as 3 percent of the total.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan does not require a down payment, has mimimal closing costs, and provides the advantage of a competitive interest rate. Although the VA does not finance the mortgages, it does issue a certificate of eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You can finance 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 home's price, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher interest rate with the loan from the seller.

No matter your strategy of getting together your down payment, the thrill of owning your own home will be just as sweet!

Want to discuss your down payment? Call us: (203) 729-6681.

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