Putting Together Your Down Payment

Many buyers qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few straightforward ways to put together a down payment

Reduce expenses and save. Turn your budget upside-down to discover extra money to go toward your down payment. There are bank programs through which some of your take-home pay is automatically deposited into savings each pay period. You could look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your vacation.

Work a second job and sell things you do not need. Maybe you can find an additional job and save your earnings. In addition, you can make a comprehensive inventory of things you can sell. Unworn gold jewelry can be sold at local jewelers. Multiple small things may add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you own.

Borrow from your retirement funds. Research the specifics of your particular plan. Many people get down payment money by withdrawing what they need from their IRAs or taking funds out of their 401(k) plans. Be sure you understand the tax ramifications, your obligation for repaying funds, and possible early withdrawal penalties.

Request a generous gift from family. Many homebuyers are sometimes lucky enough to get help with their down payment assistance from thoughtful family members who are prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your first home.

Learn about housing finance agencies. These types of agencies extend provisional loan programs to low and moderate-income buyers, buyers with an interest in remodeling a residence within a specific part of the city, and additional specific types of buyers as defined by the finance agency. Financing with this type of agency, you probably will get an interest rate that is below market, down payment help and other advantages. These kinds of agencies can help eligible homebuyers with a lower interest rate, get you your down payment, and offer other assistance. These non-profit agencies to build up the value of homes in certain neighborhoods.

Research no-down and low-down mortgage loans.

  • 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 aiding low and moderate-income individuals get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling new homebuyers who might not be eligible for a conventional loan, to obtain home financing. Down payment sums for FHA mortgages are lower than those with typical mortgage loans, although these mortgages come with average rates of interest. The down payment may be as low as three percent and the closing costs might be packaged in the mortgage.

  • VA loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a low interest rate, no down payment, and limited closing costs. Although the mortgages don't originate from the VA, the office verfifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment through a second mortgage that closes with the first. Usually the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to loan you a portion of his home equity to help you get your down payment funds. The buyer funds 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.

The satisfaction will be the same, no matter which approach you use to come up with your down payment. Your brand new home will be worth it!

Need to talk about the best options for down payments? Call us at 718-441-7000.

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