Building Your Down Payment

Many buyers qualify for several different kinds of mortgages, but they don't have a lot of cash to put up the standard down payment. Want to look into getting a new house, but don't know how you should put together a down payment?

Tighten your belt and save. Be on the look-out for ways you can reduce your expenditures to save toward a down payment. You might also try enrolling in an automatic savings plan to have a portion of your payroll automatically deposited into savings. Some practical methods to save additional funds include moving into a residence that is less expensive, and staying local for your vacation for a year or two.

Work a second job and sell things you don't need. Perhaps you can find an additional job to get your down payment money. You can also get creative about the items you may be able to sell. You may own collectibles you can sell at an online auction, or quality household goods for a tag or garage sale. You might also explore what your investments will bring if sold.

Borrow from retirement funds. Explore the specifics of your individual plan. It is possible to borrow money from a 401(k) plan for you down payment or get a withdrawal from an Individual Retirement Account. Make sure you understand the tax consequences, your obligation for repayment, and possible penalties for withdrawing early.

Request a gift from your family. Many homebuyers somtimes receive down payment assistance from caring family members who are prepared to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your own home.

Contact housing finance agencies. Special loan programs are offered to buyers in specific situations, such as low income buyers or people looking to renovating houses in a targeted area, among others. Financing through this kind of agency, you probably will be given a below market interest rate, down payment help and other incentives. Housing finance agencies can assist eligible homebuyers with a lower rate of interest, get you your down payment, and provide other benefits. The main purpose of not-for-profit housing finance agencies is promoting the purchase of homes in targeted places.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income buyers get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, making the buyers eligible for a mortgage loan. Interest rates for an FHA mortgage are usually the current interest rate, but the down payment with an FHA loan are less than those of conventional loans. The required down payment may go as low as 3 percent and the closing costs could be covered by the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive rate of interest. Even though the mortgages don't originate from the VA, the department certifies borrowers 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. Generally the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than having to pull together the usual 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. You would borrow the largest portion of the purchase price from a traditional lending institution and finance the remaining amount with the seller. Typically, this type of second mortgage will have higher interest.

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

Want to discuss down payments? Give us a call at 718-441-7000.

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