Putting Together Your Down Payment

Lots of people who would like to buy a new house can easily qualify for various loan programs, but they don't have much to put up the standard down payment. Do you want to buy a new home, but don't know how to put together your down payment?

Slash your budget and build up savings. Look for ways to trim your monthly expenses to set aside funds for a down payment. You might also decide to enroll in an automatic savings plan at your bank to automatically have a set portion of your paycheck deposited into your savings account. You would be wise to look into some big expenses in your spending history that you can do without, 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 items you do not really need and get a second job. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can make a comprehensive list of items you may be able to sell. Broken gold jewelry can bring a good amount from local jewelers. Multiple small items may add up to a nice sum at a garage or tag sale. You might also research what any investments you have will bring if sold.

Tap into your retirement funds. Check the parameters of your specific plan. It is possible to take out funds from a 401(k) plan for a down payment or perform a withdrawal from an IRA. Be sure you know about any penalties, the effect this will have on your income taxes, and repayment terms.

Ask for a gift from your family. Many homebuyers somtimes receive help with their down payment help from giving parents and other family members who are eager to help them get into their own home. Your family members may be happy at the chance to help you reach the milestone of buying your first home.

Research housing finance agencies. These agencies offer special mortgage programs to low and moderate-income homebuyers, buyers interested in sprucing up a house in a specific area, and additional specific kinds of buyers as specified by the finance agency. Working through this type of agency, you probably will get a below market interest rate, down payment assistance and other advantages. Housing finance agencies can assist you with a reduced interest rate, help with your down payment, and offer other assistance. These non-profit programs were formed to build up the value of homes in specific places.

Explore no-down and low-down mortgages.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low and moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling buyers who might not be eligible for a typical loan, to receive financing. Down payment requirements for FHA mortgages are below those of conventional mortgage loans, even though these loans come with current rates of interest. The required down payment can be as low as three percent and the closing costs may be financed in the mortgage.

  • VA loans

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

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this type of second mortgage has a higher rate of interest.

No matter your method of putting together your down payment, the thrill of owning your own home will be just as great!

Want to discuss down payments? Give us a call at (510) 683-9850.

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