Building Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they don't have much to pay the standard down payment. We have a few ideas

Cut expenses and save. Turn your budget upside-down to discover extra money to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your paycheck moved into savings. You could look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your family vacation.

Sell things you do not need and find a second job. Perhaps you can get a second job to get your down payment money. You can also seriously consider the possessions you actually need and the things you can sell. You might own desirable items you can sell on an online auction, or quality household goods for a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from your retirement plan. Check the provisions of your particular plan. Some people get down payment money from withdrawing funds from Individual Retirement Accounts or borrowing from 401(k) plans. Make sure you comprehend the tax ramifications, your obligation for repayment, and possible early withdrawal penalties.

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

Research housing finance agencies. Special loan programs are provided to homebuyers in specific circumstances, like low income homebuyers or buyers looking to improve houses in a certain neighborhood, among others. With the help of a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other advantages. These types of agencies may assist you with a reduced interest rate, get you your down payment, and offer other advantages. The primary goal of non-profit housing finance agencies is promoting the purchase of homes in certain places.

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

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income Americans get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling buyers who might not qualify for a typical loan, to get financing. Interest rates for an FHA mortgage usually feature the going interest rate, while the down payment requirements for an FHA loan will be lower than those of conventional loans. The down payment can go as low as 3 percent and the closing costs could be covered by the mortgage loan.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan does not require a down payment, has limited closing costs, and provides the benefit of a competitive rate of interest. While the VA doesn't issue the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You may fund your down payment through a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the home's price, and the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her equity. The buyer finances the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually this type of second mortgage has a higher rate of interest.

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

Need to talk about your down payment? Give us a call at 718-441-7000.

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