Putting Together Your Down Payment

Lots of borrowers 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. Look for ways to reduce your expenses to set aside funds for a down payment. There are bank programs through which some of your take-home pay is automatically transferred into a savings account every pay period. Some practical approaches to put together funds include moving into less expensive housing, and staying home for your family vacation this year.

Work a second job and sell things you don't need. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can put together an exhaustive list of things you may be able to sell. Broken gold jewelry can bring a good price from local jewelry stores. A closetful of small things may add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you own.

Tap into your retirement funds. Investigate the parameters of your retirement program. It is possible to take out funds from a 401(k) for a down payment or get a withdrawal from an Individual Retirement Account. Be sure you know about any penalties, the way this will affect on your income taxes, and repayment obligation.

Ask for help from members of your family. Many buyers are often lucky enough to receive down payment help from thoughtful parents and other family members who are eager to help get them in their first home. Your family members may be pleased to help you reach the goal of buying your own home.

Learn about housing finance agencies. These agencies offer special mortgate loan programs to moderate and low income buyers, buyers with an interest in sprucing up a house in a particular area, and additional groups as defined by the agency. With the help of a housing finance agency, you can be given a below market interest rate, down payment help and other perks. These kinds of agencies can help you with a reduced interest rate, get you your down payment, and provide other assistance. The main mission of non-profit housing finance agencies is to boost the purchase of homes in targeted parts of the city.

Explore no-down and low-down mortgage loan programs.

  • 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 a vital part in assisting low and moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who might not be able to qualify for a conventional mortgage loan on their own, by offering mortgage insurance to the private lenders. Interest rates with an FHA loan typically feature the current interest rate, but the down payment requirements for an FHA loan will be below those of conventional loans. The required down payment can go as low as three percent while the closing costs could be financed in the mortgage.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. Even though the VA does not actually issue the mortgages, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers the remaining 10%, instead of having to pull together the usual 20% down payment.

  • Carry-Back loans

    In the case of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a somewhat higher rate with the loan from the seller.

No matter how you gather your down payment, the satisfaction of owning your own home will be just as sweet!

Want to discuss the best options for down payments? Call us at (718) 477-4405.

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