Building Your Down Payment

Lots of buyers 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. Scrutinize the budget to uncover extra money to go toward your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically transferred into a savings account every 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 may move into less expensive housing, or skip a vacation.

Sell things you don't need and get a part-time job. Perhaps you can find a second job and build up your earnings. Additionally, you can make an exhaustive inventory of things you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. You may own collectibles you can put up for sale on an online auction, or household items for a garage or tag sale. You might also look into what your investments may bring if sold.

Borrow your down payment from your retirement plan. Check the parameters of your specific program. It is possible to borrow funds from a 401(k) for you down payment or make a withdrawal from an IRA. Be sure to find out about the tax consequences, repayment terms, and penalties for withdrawing early.

Ask for assistance from family members. First-time homebuyers are sometimes lucky enough to receive down payment assistance from gracious family members who may be anxious to help them get into their own home. Your family members may be inclined to help you reach the milestone of buying your first home.

Contact housing finance agencies. Special mortgate loan programs are provided to homebuyers in certain circumstances, such as low income homebuyers or people looking to remodel houses in a particular place, among others. With the help of this kind of agency, you probably will get a below market interest rate, down payment assistance and other incentives. These types of agencies can assist eligible buyers with a reduced interest rate, help with your down payment, and provide other assistance. These non-profit programs exist to promote community in particular places.

Explore no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income buyers qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling buyers who might not be eligible for a typical loan, to obtain financing. Interest rates with an FHA loan generally feature the going interest rate, while the down payment requirements for an FHA loan are below those of conventional loans. The down payment can go as low as 3 percent while the closing costs can be financed in the mortgage.

  • VA mortgages

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a reasonable interest rate, no down payment, and minimal closing costs. While the VA doesn't actually issue the mortgages, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a slightly higher rate on the loan from the seller.

No matter your strategy of pulling together your down payment, the thrill of reaching the goal of living in your own home will be just as sweet!

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

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