Your Down Payment

Lots of borrowers can easily qualify for a loan, but they can't afford a large down payment. Want to look into getting a new home, but don't know how you should get together your down payment?

Slash the budget and build up savings. Be on the look-out for ways you can trim your expenses to save toward a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically transferred into savings every pay period. Some effective strategies to save additional funds include moving into a residence that is less expensive, and staying home for your vacation this year.

Sell things you do not need and find a part-time job. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get serious about the possessions you really need and the things you may be able to sell. Multiple small items can add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you own.

Borrow from your retirement funds. Investigate the parameters of your particular plan. Some people get down payment money by withdrawing from IRAs or borrowing from 401(k) programs. Be sure you understand the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for help from members of your family. Many homebuyers are often lucky enough to get down payment assistance from thoughtful family members who are prepared to help get them in their own home. Your family members may be pleased to help you reach the goal of having your first home.

Research housing finance agencies. These agencies provide special mortgage programs to moderate and low income homebuyers, buyers with an interest in rehabilitating a residence within a targeted part of the city, and additional specific types of buyers as defined by the agency. Financing with a housing finance agency, you may get an interest rate that is below market, down payment help and other advantages. These types of agencies can assist eligible homebuyers with a lower interest rate, get you your down payment, and offer other advantages. These non-profit programs were established to promote community in specific places.

Learn about low-down and no-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low and moderate-income families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage loan. Interest rates for an FHA mortgage usually feature the going interest rate, but the down payment amounts with an FHA mortgage are lower than those of conventional loans. Closing costs can be financed in the mortgage, and the down payment may be as low as 3% of the purchase price.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a low interest rate, no down payment, and reduced closing costs. While it's true that the loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment with a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the home's price, while the first mortgage covers 80 percent. In contrast to the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Typically you will pay a somewhat higher rate on the loan financed by the seller.

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

Want to discuss down payment options? Give us a call at 205-941-1484.

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