Putting Together Your Down Payment
Lots of folks who would like to purchase a new house can easily qualify for a loan, but they can't afford a large down payment. Get started here
Slash the budget and build up savings. Scrutinize the budget to discover extra money to save for your down payment. Also, you can look into bank programs in which a portion of your take-home pay is automatically placed into a savings account each pay period. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or skip a vacation.
Sell things you don't need and get a second job. Perhaps you can get a second job to get your down payment money. You can also get serious about the possessions you really need and the things you can put up for sale. Maybe you own desirable items you can put up for sale at an online auction, or household items for a garage or tag sale. You could also research what your investments could sell for.
Tap into your retirement funds. Investigate the provisions of your retirement plan. It is possible to take out funds from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Make sure to learn about the tax consequences, repayment terms, and early withdrawal penalties.
Request a gift from your family. Many buyers are often fortunate enough to receive help with their down payment assistance from giving parents and other family members who are willing to help get them in their first home. Your family members may be pleased at the chance to help you reach the goal of owning your first home.
Contact housing finance agencies. These agencies provide provisional mortgate loan programs to low and moderate-income homebuyers, buyers with an interest in remodeling a house in a particular part of the city, and other groups as defined by each agency. Working with a housing finance agency, you may be given an interest rate that is below market, down payment help and other incentives. These kinds of agencies can assist eligible homebuyers with a lower rate of interest, get you your down payment, and offer other advantages. These non-profit agencies exist to promote home ownership in particular places.
Learn about low-down and no-down mortgages.
- 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 part in aiding low and moderate-income individuals get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to get mortgages.
FHA aids first-time buyers and others who may not be eligible for a conventional mortgage loan on their own, by providing mortgage insurance to private lenders.
Down payment requirements for FHA mortgages are below those with traditional mortgage loans, even though these mortgages hold current rates of interest. The down payment can be as low as 3 percent while the closing costs may be financed in the mortgage.
- VA mortgages
VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a reasonable rate of interest, no down payment, and limited closing costs. Even though the loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.
- Piggy-back loans
You may finance your down payment with a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, instead of come up with the usual 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically, this kind of second mortgage will have a higher rate of interest.
No matter your method of getting together your down payment, the satisfaction of living in your own home will be just as great!
Want to discuss down payment options? Call us at 718-441-7000.