Building Your Down Payment

Many borrowers can qualify for several different kinds of mortgages, but they don't have much to pay a down payment. Here are a few straightforward methods that will help you put together a down payment

Slash your budget and build up savings. Scrutinize the budget to discover extra money to go toward your down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a set portion of your paycheck transferred into a savings account. Some practical strategies to build up funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Work a second job and sell things you do not need. Perhaps you can find an additional job and build up your earnings. In addition, you can make an exhaustive inventory of things you can sell. Unused gold jewelry can be sold at local jewelry stores. A closetful of small items may add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow money from a retirement plan. Check the parameters of your particular plan. You may borrow funds from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Be sure you understand the tax consequences, your obligation for repaying the money, and any penalties for withdrawing early.

Ask for a gift from your family. Many buyers somtimes get help with their down payment assistance from gracious family members who are able to help them get into their first home. Your family members may be willing to help you reach the goal of having your first home.

Research housing finance agencies. These types of agencies extend special mortgage programs to moderate and low income buyers, buyers with an interest in renovating a home in a particular area, and additional groups as specified by each agency. Working through a housing finance agency, you probably will get an interest rate that is below market, down payment help and other advantages. Housing finance agencies may assist you with a reduced rate of interest, get you your down payment, and provide other benefits. The primary purpose of non-profit housing finance agencies is promoting residential ownership in particular parts of the city.

Research 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 critical role in assisting low to moderate-income buyers get mortgage loans. An office 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 qualify for a typical mortgage, to receive a mortgage. Down payment amounts for FHA loans are smaller than those with typical mortgages, even though these mortgages have average interest rates. Closing costs might be included in the mortgage, and the down payment may be as low as 3% of the total.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. While the VA doesn't actually provide the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You can fund a down payment through a second mortgage that closes at the same time as the first. Usually the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    In the option of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer finances the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you will pay a slightly higher rate on the loan financed by the seller.

No matter your method of putting together your down payment, the satisfaction of owning your own home will be just as sweet!

Need to talk about your down payment? Call us: 718-441-7000.

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