Putting Together Your Down Payment

Many borrowers can easily qualify for several different kinds of mortgages, but they don't have a lot of cash to pay a down payment. Here are a few straightforward ways to put together your down payment

Cut expenses and save. Be on the look-out for ways to reduce your monthly expenditures to set aside money for a down payment. There are bank programs in which some of your paycheck is automatically placed into a savings account each pay period. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your vacation.

Work more and sell items you don't need. Try to find a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the items you can sell. You may 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 hold.

Tap into your retirement funds. Investigate the parameters of your retirement plan. Some homebuyers get down payment money by withdrawing funds from their IRAs or getting funds out of 401(k) programs. Make sure you are knowledgable about any penalties, the effect this will have on income taxes, and repayment terms.

Ask for assistance from generous members of your family. First-time homebuyers somtimes get help with their down payment assistance from giving parents and other family members who are anxious to help them get into their first home. Your family members may be pleased at the chance to help you reach the goal of owning your own home.

Research housing finance agencies. Provisional mortgage programs are extended to buyers in certain circumstances, such as low income buyers or homebuyers looking to renovating homes in a specific place, among others. With the help of this kind of agency, you probably will get a below market interest rate, down payment assistance and other advantages. Housing finance agencies can help eligible homebuyers with a lower interest rate, get you your down payment, and offer other advantages. These non-profit agencies were formed to boost community in certain places.

Find out about low-down and no-down mortgage loan programs.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low to moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgage loans. FHA helps first-time homebuyers and others who would not be able to qualify for a conventional mortgage on their own, by offering mortgage insurance to the lenders. Down payment totals for FHA mortgages are below those for conventional mortgage loans, even though these mortgages have average interest rates. The required down payment can be as low as three percent while the closing costs could be covered by the mortgage loan.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a reasonable fixed interest rate, no down payment, and limited closing costs. Although the loans are not actually financed by the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can finance a down payment through a second mortgage that closes at the same time as the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you part of his own equity to help you get your down payment money. You would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Often, this kind of second mortgage will have higher interest.

The feeling of accomplishment will be the same, no matter how you manage to get together your down payment. Your new home will be your reward!

Want to discuss down payment options? Give us a call at (203) 729-6681.

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