Your Down Payment

Lots of buyers can qualify for various loan programs, but they don't have a large sum of cash to pay a down payment. Here are a few methods that will help you get together a down payment

Reduce expenses and save. Look for ways to reduce your monthly expenses to set aside funds for a down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically deposited into savings each pay period. You might 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 might decide to move into less expensive housing, or skip a vacation.

Sell things you do not really need and find a part-time job. Maybe you can get an additional job and save your earnings. In addition, you can make an exhaustive inventory of items you can sell. Broken gold jewelry can be sold at local jewelers. Multiple small things may add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into retirement funds. Explore the specifics of your particular plan. You may borrow money from a 401(k) plan for a down payment or perform a withdrawal from an IRA. You will need to be sure you understand about any penalties, the effect this could have on taxes, and repayment obligation.

Ask for help from generous members of your family. Many buyers are often lucky enough to get help with their down payment help from caring family members who may be willing to help get them in their first home. Your family members may be eager to help you reach the milestone of having your first home.

Contact housing finance agencies. These agencies provide special mortgage programs to moderate and low income buyers, buyers interested in sprucing up a residence within a specific area, and other certain kinds of buyers as defined by each finance agency. With the help of this kind of agency, you may get an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may help you with a reduced interest rate, get you your down payment, and offer other benefits. The primary mission of non-profit housing finance agencies is to promote the purchase of homes in certain areas.

Research no-down and low-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 role in helping low and moderate-income individuals qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who may not be able to qualify for a conventional mortgage on their own, by offering mortgage insurance to lenders. Down payment requirements for FHA loans are lower than those with conventional mortgage loans, even though these mortgages come with average rates of interest. The down payment can go as low as three percent and the closing costs might be financed in the mortgage loan.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a low fixed rate of interest, no down payment, and limited closing costs. While the mortgage loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment using a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to lend you a portion of his own equity to help you get your down payment money. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a somewhat higher rate with the loan from the seller.

The feeling of accomplishment will be the same, no matter which strategy you use to come up with the down payment. Your new home will be worth it!

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

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