Building Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have much to put up a down payment. Want to buy a new house, but don't know how to get together your down payment?

Tighten your belt and save. Look for ways you can reduce your monthly expenses to save toward a down payment. There are bank programs in which some of your paycheck is automatically deposited into savings every pay period. You might look into some big expenses in your budget that you can live without, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a family vacation.

Sell things you do not need and find a part-time job. Try to find an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the items you could be able to put up for sale. Multiple small things might add up to a nice sum at a garage or tag sale. Also, you can consider selling any investments you hold.

Borrow your down payment from your retirement plan. Explore the specifics for your particular plan. You can take out funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Make sure you understand about any penalties, the way this will affect on taxes, and repayment obligation.

Request a gift from family. Many homebuyers somtimes receive help with their down payment assistance from gracious family members who are prepared to help them get into their first home. Your family members may be inclined to help you reach the milestone of owning your first home.

Research housing finance agencies. These types of agencies provide provisional mortgage programs to low and moderate-income homebuyers, buyers with an interest in remodeling a house in a specific part of the city, and other certain types of buyers as specified by the finance agency. Financing through this kind of agency, you can get a below market interest rate, down payment help and other advantages. Housing finance agencies can help eligible buyers with a reduced rate of interest, help with your down payment, and offer other advantages. The central mission of not-for-profit housing finance agencies is boosting the purchase of homes in particular parts of the city.

Explore no-down and low-down mortgage loans.

  • FHA mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting home financing. FHA aids first-time homebuyers and others who may not be eligible for a traditional mortgage loan on their own, by providing mortgage insurance to lenders. Interest rates with an FHA mortgage typically feature the market interest rate, but the down payment with an FHA mortgage will be lower than those of conventional loans. The down payment may go as low as 3 percent while the closing costs could be covered by the mortgage loan.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a low rate of interest, no down payment, and minimal closing costs. While the loans are not actually provided by the VA, the department certifies applicants by providing 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" funds 10%. The borrower pays the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Typically, this kind of second mortgage has a higher rate of interest.

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

Need to talk about down payments? Give us a call at (334) 285-8850.

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