Your Down Payment

Lots of buyers qualify for various loan programs, but they don't have a lot of money to pay a down payment. Here are a few straightforward methods that will help you put together a down payment

Cut expenses and save. Scrutinize the budget to discover extra money to save for your down payment. Also, you can look into bank programs through which a specific portion of your take-home pay is automatically deposited into savings every pay period. You would be wise to look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your vacation.

Work more and sell items you do not need. Maybe you can find an additional job and save your earnings. Additionally, you can make a comprehensive list of items you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. A closetful of small items could add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow from retirement funds. Investigate the provisions of your specific program. It is possible to borrow money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Make sure to learn about the tax ramifications, repayment terms, and early withdrawal penalties.

Ask for help from members of your family. First-time buyers somtimes receive down payment help from giving family members who may be prepared to help get them in their first home. Your family members may be inclined to help you reach the milestone of having your first home.

Contact housing finance agencies. Special mortgage loans are offered to buyers in certain situations, such as low income homebuyers or people planning to remodel houses in a certain part of town, among others. Financing with a housing finance agency, you may be given a below market interest rate, down payment assistance and other incentives. These types of agencies may help you with a lower rate of interest, get you your down payment, and offer other assistance. These non-profit agencies to promote community in specific places.

Learn about low-down and no-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income individuals get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to qualify for mortgage loans. FHA aids first-time buyers and others who would not be able to qualify for a traditional mortgage on their own, by providing mortgage insurance to private lenders. Down payment amounts for FHA loans are smaller than those of traditional mortgage loans, although these loans have average interest rates. The required down payment can be as low as three percent while the closing costs might be covered by the mortgage loan.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a competitive fixed rate of interest, no down payment, and limited closing costs. Even though the VA does not actually issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    You can fund a down payment through a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, while the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you some of his own equity to help you with your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Usually you will pay a somewhat higher rate with the loan from the seller.

The feeling of accomplishment will be the same, no matter which approach you use to put together the down payment. Your new home will be well worth it!

Want to discuss down payments? Give us a call: (203) 526-9345.

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