Your Down Payment

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Many buyers qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where to get started

Tighten your belt and save. Look for ways to reduce your expenses to put away money for a down payment. There are bank programs in which some of your take-home pay is automatically deposited into a savings account every pay period. You would be wise to 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 move into less expensive housing, or skip a family vacation.

Sell things you don't really need and find a part-time job. Perhaps you can get an additional job and build up your earnings. You can also get serious about the possessions you actually need and the things you might be able to sell. Multiple small items may add up to a nice sum at a garage or tag sale. Also, you can consider selling any investments you hold.

Borrow funds from your retirement plan. Explore the details of your individual plan. Many homebuyers get down payment money by withdrawing what they need from IRAs or borrowing from 401(k) plans. Be sure you comprehend the tax consequences, repayment terms, and possible penalties for withdrawing early.

Ask for assistance from generous members of your family. First-time homebuyers sometimes get help with their down payment help from giving family members who are prepared to help them get into their first home. Your family members may be eager to help you reach the goal of owning your own home.

Learn about housing finance agencies. Provisional mortgage loan programs are provided to buyers in specific situations, like low income buyers or people looking to remodel homes in a certain neighborhood, among others. With the help of this kind of agency, you can get an interest rate that is below market, down payment help and other perks. Housing finance agencies can assist you with a reduced interest rate, help with your down payment, and provide other advantages. The principal goal of non-profit housing finance agencies is boosting residential ownership in certain parts of the city.

Learn about low-down and no-down mortgage loans.

• FHA mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income buyers get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA provides mortgage insurance to the private lenders, enabling new homebuyers who may not be eligible for a traditional loan, to receive home financing. Interest rates with an FHA loan are normally the current interest rate, but the down payment for an FHA mortgage are below those of conventional loans. The down payment can go as low as three percent while the closing costs may be included in the mortgage.

• VA mortgage loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a reasonable fixed rate of interest, no down payment, and limited closing costs. While the VA does not actually issue the loans, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  You can fund a down payment through a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. Instead of the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In the case of a seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional lender and finance the remainder with the seller. Generally, this type of second mortgage will have higher interest.

Want to discuss your down payment? Call us: 972-447-5778.