Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Do you want to buy a new home, but aren't sure how to put together a down payment?

Slash your budget and build up savings. Be on the look-out for ways you can reduce your expenses to put away money for a down payment. You also could enroll in an automatic savings plan to have a portion of your payroll automatically moved into savings. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.

Sell things you don't really need and get a part-time job. Look for a second job. This can be rough, but the temporary trial can help you get your down payment. You can also get creative about the things you can sell. Maybe you own desirable items you can put up for sale on an auction website, or household goods for a tag or garage sale. You can also research what any investments you hold will bring if sold.

Borrow from your retirement plan. Research the specifics for your particular plan. You may borrow money from a 401(k) plan for you down payment or withdraw from an IRA. You will want to ensure you understand about any penalties, the way this may affect on income taxes, and repayment terms.

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

Contact housing finance agencies. These types of agencies provide special mortgate loan programs to moderate and low income homebuyers, buyers with an interest in sprucing up a home in a specific part of the city, and other particular types of buyers as defined by each finance agency. Working through this kind of agency, you may receive a below market interest rate, down payment help and other advantages. Housing finance agencies can help you with a reduced rate of interest, get you your down payment, and provide other assistance. The central mission of non-profit housing finance agencies is promoting the purchase of homes in particular areas.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income Americans qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who would not be able to qualify for a traditional mortgage on their own, by offering mortgage insurance to the lenders. Down payment requirements for FHA loans are smaller than those for traditional mortgages, although these mortgages have average rates of interest. Closing costs may be covered by the mortgage, and the down payment can be as low as 3 percent of the total.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which generally offers a low fixed rate of interest, no down payment, and reduced closing costs. Although the VA does not actually issue the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. In contrast to the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you a portion of his home equity to help you with your down payment funds. The buyer funds the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically you'll pay a slightly higher interest rate with the loan from the seller.

The satisfaction will be the same, no matter which strategy you use to pull together your down payment. Your brand new home will be worth it!

Need to talk about down payment options? Give us a call at (203) 729-6681.

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