Your Down Payment

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Lots of folks who would like to purchase a new home can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to put together a down payment

Tighten your belt and save. Be on the look-out for ways to trim your expenses to put away money for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically placed into savings each pay period. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a vacation.

Sell items you don't need and get a second job. Perhaps you can find an additional job and build up your earnings. You can also get creative about the items you might be able to put up for sale. You may have desirable items you can sell at an online auction, or household goods for a tag or garage sale. You could also look into what your investments may sell for.

Borrow funds from a retirement plan. Check the provisions of your retirement program. You can pull out funds from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Make sure you understand the tax ramifications, your obligation for repayment, and any early withdrawal penalties.

Ask for assistance from members of your family. First-time buyers are often fortunate enough to receive help with their down payment help from gracious parents and other family members who are prepared to help them get into their own home. Your family members may be inclined to help you reach the goal of buying your first home.

Research housing finance agencies. These types of agencies provide provisional loan programs for moderate and low income homebuyers, buyers interested in sprucing up a residence within a particular area, and other certain kinds of buyers as defined by the agency. Financing with a housing finance agency, you probably will get a below market interest rate, down payment help and other incentives. These kinds of agencies may help eligible homebuyers with a lower rate of interest, get you your down payment, and offer other advantages. The main purpose of not-for-profit housing finance agencies is to promote the purchase of homes in certain places.

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

  • 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 vital part in aiding low and moderate-income Americans get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who may not be able to qualify for a typical mortgage by themselves, by offering mortgage insurance to the private lenders. Interest rates for an FHA mortgage normally feature the going interest rate, but the down payment with an FHA mortgage are below those of conventional loans. Closing costs can be financed within the mortgage, while the down payment may be as low as 3 percent of the purchase price.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists veterans and service people. This special loan requires no down payment, has limited closing costs, and provides the advantage of a competitive interest rate. While the VA doesn't finance the mortgages, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you part of his own equity to assist you with your down payment money. The buyer funds the majority of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically you'll pay a slightly higher interest rate on the loan from the seller.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your new home will be worth it!


Need to talk about down payment options? Call us at 800-880-8557.

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