Your Down Payment

Lots of borrowers qualify for a loan, but they don't have much to put up a down payment. Below are a few methods that will help you get together a down payment

Slash your budget and build up savings. Look for ways to trim your monthly expenses to set aside money for a down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into a savings account. Some practical approaches to build up funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Work more and sell things you do not need. Try to find a second job. This can be exhausting, but the temporary trial can help you get your down payment. Additionally, you can make a comprehensive list of items you can sell. Broken gold jewelry can bring a good amount from local jewelry stores. Maybe you own desirable items you can put up for sale at an online auction, or household items for a tag or garage sale. You could also look into what your investments may bring if sold.

Tap into retirement funds. Check the provisions of your specific plan. It is possible to borrow money from a 401(k) plan for you down payment or withdraw from an IRA. Be sure you understand about any penalties, the effect this will have on your income taxes, and repayment obligation.

Ask for a generous gift from family. Many homebuyers are sometimes fortunate enough to get help with their down payment assistance from caring family members who may be able to help them get into their own home. Your family members may be inclined to help you reach the milestone of buying your first home.

Research housing finance agencies. These agencies provide special loan programs to moderate and low income buyers, buyers with an interest in remodeling a home within a particular area, and additional groups as defined by each finance agency. Working with this type of agency, you may get a below market interest rate, down payment help and other benefits. Housing finance agencies may help you with a lower rate of interest, help with your down payment, and offer other advantages. The central goal of not-for-profit housing finance agencies is build up residential ownership in certain places.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income buyers get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get mortgage loans. FHA assists first-time buyers and others who may not be eligible for a conventional mortgage on their own, by offering mortgage insurance to private lenders. Interest rates for an FHA loan are normally the current interest rate, but the down payment with an FHA loan are below those of conventional loans. Closing costs might be financed within the mortgage, and your down payment may be as low as 3 percent of the total amount.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This particular loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. While the mortgage loans aren't actually financed by the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment through a second mortgage that closes with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you some of his home equity to help you get your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional lender and borrow the remainder from the seller. Generally, this form of second mortgage will have higher interest.

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

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

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