Building Your Down Payment

Lots of folks who would like to purchase a new house can qualify for several different kinds of mortgages, but they don't have a lot of money to pay the standard down payment. Want to buy a new home, but aren't sure how to get together a down payment?

Slash your budget and build up savings. Look for ways you can trim your expenses to set aside funds for a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically placed into a savings account each pay period. Some effective ways to save additional funds include moving into housing that is less expensive, and skipping your vacation for a year or two.

Work a second job and sell items you do not need. Maybe you can get an additional job to get your down payment money. Additionally, you can put together an exhaustive list of items you may be able to sell. Unworn gold jewelry can be sold at local jewelers. Multiple small things can 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 your retirement plan. Explore the details for your individual plan. You can pull out funds from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Make sure you comprehend the tax consequences, your obligation for repayment, and any penalties for withdrawing early.

Ask for a gift from your family. First-time homebuyers are sometimes lucky enough to receive help with their down payment assistance from gracious family members who may be anxious to help them get into their own home. Your family members may be inclined to help you reach the milestone of having your first home.

Learn about housing finance agencies. These agencies provide provisional mortgage loans to moderate and low income borrowers, buyers interested in remodeling a residence in a specific part of the city, and other specific kinds of buyers as defined by the finance agency. With the help of this kind of agency, you may receive a below market interest rate, down payment assistance and other perks. Housing finance agencies can help eligible buyers with a reduced rate of interest, help with your down payment, and offer other assistance. The principal purpose of not-for-profit housing finance agencies is boosting the purchase of homes in particular areas.

Find out about low-down and no-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income buyers qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling homebuyers who will not qualify for a conventional mortgage, to get a mortgage. Down payment amounts for FHA loans are below those with traditional mortgage loans, even though these loans come with current rates of interest. The down payment may go as low as 3 percent and the closing costs might be financed in the mortgage loan.

  • VA loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a competitive fixed rate of interest, no down payment, and minimal closing costs. While the VA does not issue the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you a portion of his own equity to help you with your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher interest rate with the loan financed by the seller.

No matter how you gather down payment money, the thrill of reaching the goal of owning your own home will be just as sweet!

Need to talk about the best options for down payments? Give us a call at 205-941-1484.

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