Your Down Payment
Lots of borrowers can qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new home, but don't know how you should put together a down payment?
Tighten your belt and save. Scrutinize your budget to uncover ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your paycheck 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 might move into less expensive housing, or stay local for your annual vacation.
Work a second job and sell items you don't need. Try to get an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the items you can sell. Multiple small things might add up to a nice sum at a garage or tag sale. You could also look into what any investments you have could sell for.
Borrow from a retirement plan. Check the provisions of your retirement program. It is possible to pull out money from a 401(k) for you down payment or perform a withdrawal from an IRA. Make sure to learn about the tax ramifications, your obligation for repaying the money, and penalties for withdrawing early.
Ask for assistance from generous family members. Many homebuyers somtimes get help with their down payment assistance from giving family members who are eager to help get them in their own home. Your family members may be inclined to help you reach the milestone of owning your own home.
Research housing finance agencies. Special loan programs are given to buyers in specific circumstances, such as low income buyers or homebuyers planning to remodel houses in a certain area, among others. Financing with this kind of agency, you can receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies may help you with a reduced interest rate, get you your down payment, and provide other advantages. The central purpose of non-profit housing finance agencies is to boost home ownership in specific areas.
Explore no-down and low-down mortgages.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA helps first-time buyers and others who would not be able to qualify for a conventional loan on their own, by offering mortgage insurance to private lenders.
Down payment sums for FHA loans are lower than those with conventional mortgages, although these mortgages come with average interest rates. Closing costs may be included in the mortgage, and the down payment could be as low as 3 percent of the purchase price.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive interest rate. Although the mortgage loans don't originate from the VA, the office certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
You may finance your down payment through a second mortgage that closes at the same time as the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller commits to loan you a piece of his own equity to help you get your down payment funds. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a somewhat higher interest rate with the loan from the seller.
The satisfaction will be the same, no matter how you manage to pull together your down payment. Your brand new home will be your reward!
Need to talk about down payment options? Give us a call at 877-310-6200.
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