Building Your Down Payment

Many borrowers can qualify for a mortgage loan, but they can't afford a large down payment. Here are a few ways to put together your down payment

Tighten your belt and save. Scrutinize the budget to find extra money to save for your down payment. You also could enroll in an automatic savings plan at your bank to automatically have a specific portion of your paycheck moved into your savings account. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your family vacation.

Work a second job and sell items you don't need. Look for an additional job. This can be exhausting, but the temporary trial can provide your down payment money. In addition, you can make a comprehensive inventory of things you can sell. Broken gold jewelry can be sold at local jewelry stores. A closetful of small things could add up to a nice sum at a garage or tag sale. You might also research what any investments you own could bring if sold.

Borrow money from a retirement plan. Research the specifics of your particular plan. It is possible to pull out funds from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Make sure to ask your plan representative about the tax consequences, repayment terms, and any penalties for withdrawing early.

Ask for assistance from members of your family. First-time homebuyers are sometimes fortunate enough to get help with their down payment assistance from caring family members who are prepared to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your own home.

Contact housing finance agencies. These agencies provide provisional mortgage programs for low and moderate-income buyers, buyers with an interest in rehabilitating a residence within a particular area, and additional certain kinds of buyers as specified by the finance agency. With the help of a housing finance agency, you may get a below market interest rate, down payment help and other benefits. Housing finance agencies can assist you with a lower rate of interest, get you your down payment, and offer other benefits. The primary mission of non-profit housing finance agencies is build up residential ownership in targeted areas.

Explore no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to qualify for mortgage loans. FHA offers mortgage insurance to the private lenders, enabling buyers who will not qualify for a typical mortgage, to obtain a mortgage. Down payment sums for FHA mortgages are less than those for conventional mortgage loans, even though these loans have current interest rates. Closing costs might be included in the mortgage, while your down payment could be as low as 3% of the total.

  • VA mortgage loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. Even though the loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Often the first mortgage is for 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" agreement, the seller agrees to lend you a portion of his own equity to help you get your down payment funds. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remaining amount from the seller. Usually you will pay a slightly higher rate on the loan from the seller.

No matter your strategy of putting together your down payment money, the thrill of reaching the goal of living in your own home will be just as great!

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

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