Putting Together Your Down Payment

Lots of buyers qualify for a loan, but they don't have a lot of money to pay the standard down payment. Here's where to get started

Slash your budget and build up savings. Be on the look-out for ways to reduce your monthly expenditures to set aside funds for a down payment. There are bank programs in which some of your take-home pay is automatically placed into a savings account each pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your vacation.

Sell things you do not need and get a second job. Perhaps you can get a second job and build up your earnings. You can also seriously consider the possessions you actually need and the items you may be able to sell. Maybe you have collectibles you can put up for sale at an auction website, or household items for a tag or garage sale. Also, you can look into selling any investments you hold.

Tap into your retirement funds. Explore the details of your individual plan. You can borrow money from a 401(k) for you down payment or withdraw from an IRA. You will want to ensure you understand about any penalties, the way this may affect on income taxes, and repayment obligation.

Ask for assistance from generous family members. Many buyers somtimes get down payment help from gracious family members who are eager to help them get into their first home. Your family members may be willing to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Provisional loan programs are offered to buyers in certain situations, like low income purchasers or future homeowners planning to renovating houses in a specific area, among others. Financing through a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies can assist you with a lower rate of interest, help with your down payment, and offer other assistance. These non-profit agencies exist to build up community in certain neighborhoods.

Find out about low-down and no-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income Americans qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be eligible for a traditional mortgage by themselves, by offering mortgage insurance to the lenders. Down payment sums for FHA mortgages are below those with conventional mortgage loans, even though these mortgages come with current rates of interest. Closing costs might be included in the mortgage, while the down payment could be as low as 3 percent of the total amount.

• VA mortgages

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which usually offers a competitive interest rate, no down payment, and limited closing costs. While the VA doesn't actually provide the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  You can finance your down payment using a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you a piece of his home equity to help you get your down payment money. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually this type of second mortgage has higher interest.

Need to talk about down payment options? Call us: 7184417000.