Putting Together Your Down Payment

Lots of borrowers can easily qualify for a loan, but they can't afford a large down payment. Want to look into getting a new house, but don't know how to get together your down payment?

Slash the budget and build up savings. Turn your budget inside out to uncover extra money to save for your down payment. There are bank programs in which some of your take-home pay is automatically placed into savings each pay period. You could look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your family vacation.

Work a second job and sell things you don't need. Perhaps you can find an additional job and save your earnings. In addition, you can make a comprehensive list of items you can sell. Unused gold jewelry can be sold at local jewelers. You may own collectibles you can put up for sale at an auction website, or household items for a garage or tag sale. You can also research what any investments you have will sell for.

Borrow your down payment from your retirement plan. Check the parameters of your particular plan. Some people get down payment money from withdrawing funds from IRAs or borrowing from their 401(k) plans. You will need to ensure you know about any penalties, the way this may affect on income taxes, and repayment obligation.

Ask for a generous gift from your family. First-time buyers somtimes receive help with their down payment assistance from giving family members who may be willing to help get them in their own home. Your family members may be inclined to help you reach the milestone of owning your first home.

Learn about housing finance agencies. Special mortgate loan programs are given to homebuyers in specific situations, such as low income purchasers or buyers looking to renovating homes in a targeted place, among others. With the help of this type of agency, you probably will get an interest rate that is below market, down payment assistance and other benefits. These types of agencies may assist eligible buyers with a lower rate of interest, help with your down payment, and offer other benefits. The main goal of non-profit housing finance agencies is build up home ownership in certain parts of the city.

Learn about low-down and no-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low and moderate-income individuals get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get mortgages. FHA offers mortgage insurance to the private lenders, enabling homebuyers who will not be eligible for a conventional mortgage loan, to get a mortgage. Down payment amounts for FHA loans are below those with typical mortgages, although these loans have average interest rates. The down payment can go as low as three percent while the closing costs can be covered by the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. While the VA doesn't issue the mortgages, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Generally the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. In contrast to the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you part of his own equity to assist you with your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically, this form of second mortgage has higher interest.

No matter your strategy of getting together your down payment, the satisfaction of owning your own home will be just as sweet!

Need to talk about down payment options? Call us at (718) 477-4405.

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