Putting Together Your Down Payment

Many people who are looking to buy a new house qualify for various loan programs, but they don't have a lot of money to pay a down payment. Here are a few ideas:

Tighten your belt and save. Turn your budget upside-down to find extra money to save for your down payment. You may also decide to enroll in an automatic savings plan to automatically have a set portion of your take-home pay transferred into a savings account. Some effective approaches to save additional funds include moving into a residence that is less expensive, and staying home for your vacation this year.

Work more and sell things you do not need. Maybe you can get an additional job to get your down payment money. You can also get serious about the possessions you actually need and the things you can sell. You may have collectibles you can sell at an online auction, or household goods for a tag or garage sale. Also, you might want to think about selling any investments you hold.

Borrow funds from a retirement plan. Investigate the provisions of your particular plan. Some people get down payment money from withdrawing funds from Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you know about any penalties, the effect this could have on income taxes, and repayment terms.

Ask for a gift from family. First-time buyers are often fortunate enough to get help with their down payment help from caring family members who may be eager to help get them in their own home. Your family members may be pleased to help you reach the milestone of having your own home.

Contact housing finance agencies. These agencies offer special mortgate loan programs to moderate and low income buyers, buyers interested in renovating a home in a particular area, and additional groups as specified by each agency. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies may assist you with a lower interest rate, get you your down payment, and provide other assistance. The primary purpose of not-for-profit housing finance agencies is boosting the purchase of homes in certain parts of the city.

Research no-down and low-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income families get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who may not be eligible for a typical mortgage by themselves, by offering mortgage insurance to the private lenders. Interest rates with an FHA loan generally feature the current interest rate, but the down payment with an FHA loan will be lower than those of conventional loans. Closing costs may be covered by the mortgage, while your down payment might be as low as 3% of the total amount.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has limited closing costs, and offers a competitive interest rate. Even though the VA does not actually provide the mortgage loans, it does certify eligibility to qualify for a VA loan.

  • 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 traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and finance the remainder with the seller. Usually this form of second mortgage has a higher rate of interest.

The satisfaction will be the same, no matter which method you use to come up with your down payment. Your brand new home will be your reward!

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

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