Building Your Down Payment

Many folks who would like to buy a new house can easily qualify for a loan, but they don't have a lot of money to put up the standard down payment. Start here

Tighten your belt and save. Turn your budget upside-down to uncover ways you can cut expenses to save for your down payment. You might also decide to enroll in an automatic savings plan to automatically have a specific portion of your paycheck moved into your savings account. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or skip a vacation.

Sell items you don't really need and get a part-time job. Look for an additional job. This can be rough, but the temporary trial can provide your down payment money. You can also get creative about the things you could be able to sell. Maybe you own collectibles you can put up for sale on an online auction, or quality household goods for a garage or tag sale. Also, you might want to think about selling any investments you hold.

Tap into retirement funds. Investigate the provisions of your specific program. Many people get down payment money by withdrawing what they need from Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure you understand about any penalties, the effect this could have on income taxes, and repayment obligation.

Request a gift from family. First-time buyers somtimes get help with their down payment assistance from thoughtful family members who may be willing to help them get into their own home. Your family members may be eager to help you reach the goal of having your first home.

Research housing finance agencies. These types of agencies provide special mortgage programs for low and moderate-income homebuyers, buyers with an interest in rehabilitating a residence in a specific area, and other groups as defined by the agency. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist eligible homebuyers with a lower interest rate, get you your down payment, and provide other assistance. The central purpose of not-for-profit housing finance agencies is boosting home ownership in targeted areas.

Explore no-down and low-down mortgages.

  • FHA mortgage 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 assisting low and moderate-income buyers qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling homebuyers who will not qualify for a typical loan, to get financing. Interest rates for an FHA loan generally feature the market interest rate, while the down payment amounts with an FHA mortgage will be less than those of conventional loans. Closing costs can be covered by the mortgage, while the down payment could be as low as 3 percent of the total amount.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and provides a competitive rate of interest. Although the mortgages aren't actually financed by the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Most of the time, the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you a piece of his own equity to assist you with your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remaining amount with the seller. Typically, this form of second mortgage has a higher rate of interest.

No matter how you gather down payment money, the thrill of owning your own home will be just as great!

Need to talk about down payments? Give us a call at (718) 477-4405.

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