Building Your Down Payment

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Lots of people who are looking to buy a new home can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few ideas:

Tighten your belt and save. Scrutinize the budget to find ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan to have a percentage of your payroll automatically deposited into your savings account. Some effective ways to build up funds include moving into housing that is less expensive, and staying home for your vacation for a year or two.

Sell items you don't need and get a second job. Look for an additional job. This can be rough, but the temporary trial can provide your down payment money. You can also get creative about the things you may be able to put up for sale. Multiple small items might add up to a fair amount at a garage or tag sale. You could also research what your investments may sell for.

Borrow money from a retirement plan. Explore the specifics for your particular plan. Some homebuyers get down payment money from withdrawing funds from their Individual Retirement Accounts or getting money out of their 401(k) plans. Be sure you comprehend the tax ramifications, repayment terms, and any early withdrawal penalties.

Ask for assistance from generous members of your family. First-time homebuyers somtimes get help with their down payment help from giving family members who are willing to help get them in their first home. Your family members may be inclined to help you reach the milestone of buying your first home.

Research housing finance agencies. Special mortgate loan programs are extended to homebuyers in certain situations, like low income purchasers or people looking to renovating houses in a certain part of town, among others. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other advantages. Housing finance agencies may assist eligible homebuyers with a reduced interest rate, get you your down payment, and offer other advantages. The principal goal of non-profit housing finance agencies is boosting home ownership in specific parts of the city.

Learn about low-down and no-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 vital role in assisting low to moderate-income Americans qualify for 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, helping the buyers to become eligible for a mortgage loan. Interest rates with an FHA mortgage generally feature the going interest rate, but the down payment requirements for an FHA loan are less than those of conventional loans. The down payment may go as low as three percent while the closing costs may be covered by the mortgage loan.

• VA mortgages

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

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to loan you part of his home equity to help you get your down payment money. You would finance the majority of the purchase price with a traditional lending institution and finance the remainder with the seller. Usually this kind of second mortgage has higher interest.

No matter your strategy of putting together your down payment money, the thrill of living in your own home will be just as great!

Want to discuss down payment options? Call us at 718-766-9112.