Building Your Down Payment

Many buyers qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to get together a down payment

Tighten your belt and save. Look for ways to trim your expenses to set aside money 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 every pay period. Some practical methods to build up funds include moving into housing that is less expensive, and skipping your vacation for a year or two.

Work more and sell items you do not need. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can make a comprehensive list of items you can sell. Unworn gold jewelry can be sold at local jewelry stores. You may own desirable items you can put up for sale on an online auction, or household goods for a tag or garage sale. Also, you can consider selling any investments you own.

Borrow from your retirement plan. Explore the specifics for your particular plan. You may take out funds from a 401(k) plan for a down payment or perform a withdrawal from an IRA. Be sure to find out about the tax consequences, repayment terms, and penalties for withdrawing early.

Request a generous gift from family. Many buyers somtimes receive help with their down payment assistance from giving parents and other family members who are anxious to help them get into their own home. Your family members may be willing to help you reach the milestone of having your own home.

Learn about housing finance agencies. Provisional mortgate loan programs are provided to homebuyers in certain situations, such as low income buyers or future homeowners planning to improve homes in a certain neighborhood, among others. Financing with this kind of agency, you probably will get a below market interest rate, down payment help and other incentives. These kinds of agencies may assist eligible buyers with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit agencies to build up the value of homes in particular places.

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 a critical part in helping low to moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get mortgage loans. FHA assists first-time buyers and others who would not be eligible for a typical mortgage by themselves, by offering mortgage insurance to lenders. Interest rates for an FHA mortgage are normally the current interest rate, while the down payment with an FHA mortgage will be smaller than those of conventional loans. Closing costs can be covered by the mortgage, while your down payment could be as low as 3 percent of the purchase price.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This particular loan does not require a down payment, has reduced closing costs, and provides the benefit of a competitive rate of interest. Although the mortgages don't originate from the VA, the office verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You may fund your down payment using a second mortgage that closes with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to loan you a portion of his home equity to help you with your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically, this form of second mortgage has a higher rate of interest.

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

Want to discuss down payments? Give us a call at (334) 285-8850.

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