Your Down Payment

Many buyers qualify for a loan, but they don't have a lot of money to pay a down payment. Here are a few ways to get together a down payment

Cut expenses and save. Look for ways you can trim your monthly expenses to put away money for a down payment. Also, you can look into bank programs through which some of your paycheck is automatically transferred into a savings account each pay period. You could look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Sell things you don't really need and find a part-time job. Look for a second job. This can be rough, but the temporary trial can help you get your down payment. In addition, you can make a comprehensive list of items you can sell. Unused gold jewelry can be sold at local jewelers. A closetful of small things can add up to a fair amount at a garage or tag sale. You might also explore what your investments will sell for.

Borrow from retirement funds. Check the parameters of your particular plan. You can borrow money from a 401(k) for you down payment or withdraw from an IRA. You will want to make sure you know about any penalties, the way this will affect on income taxes, and repayment terms.

Ask for a generous gift from your family. Many buyers somtimes get down payment assistance from caring parents and other family members who are eager to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of owning your first home.

Learn about housing finance agencies. These agencies provide provisional mortgage loans to low and moderate-income homebuyers, buyers interested in sprucing up a residence in a particular area, and additional groups as defined by each finance agency. Financing through this type of agency, you can get a below market interest rate, down payment help and other advantages. These kinds of agencies may help you with a reduced interest rate, help with your down payment, and provide other benefits. The main mission of not-for-profit housing finance agencies is boosting the purchase of homes in particular parts of the city.

Explore no-down and low-down mortgages.

  • 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 critical part in aiding low to moderate-income families qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who may not be eligible for a conventional mortgage loan on their own, by providing mortgage insurance to lenders. Down payment amounts for FHA mortgages are less than those for typical mortgages, although these loans hold average interest rates. Closing costs may be financed within the mortgage, and your down payment may be as low as 3% of the purchase price.

  • VA loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans qualify for a VA loan, which generally offers a reasonable fixed interest rate, no down payment, and minimal closing costs. Even though the VA does not issue the loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can fund your down payment through a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than having to pull together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you a portion of his home equity to assist you with your down payment money. You would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remaining amount with the seller. Typically you will pay a slightly higher rate on the loan from the seller.

No matter how you gather your down payment, the satisfaction of living in your own home will be just as sweet!

Need to talk about down payment options? Call us: (203) 729-6681.

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