Building Your Down Payment

Many buyers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few ideas:

Slash the budget and build up savings. Scrutinize the budget to uncover extra money to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a predetermined amount from your paycheck moved into your savings account. You might 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.

Work a second job and sell things you don't need. Try to find a second job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can make a comprehensive inventory of items you may be able to sell. Unused gold jewelry can bring a good price from local jewelry stores. Multiple small things may add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow from your retirement plan. Investigate the parameters of your specific plan. You can take out funds from a 401(k) plan for you down payment or perform a withdrawal from an IRA. Make sure you understand about any penalties, the way this may affect on your taxes, and repayment obligation.

Ask for assistance from generous members of your family. Many buyers are often fortunate enough to receive down payment help from gracious parents and other family members who may be willing to help them get into their own home. Your family members may be happy at the chance to help you reach the goal of having your own home.

Research housing finance agencies. These types of agencies provide special loan programs to moderate and low income buyers, buyers interested in remodeling a residence in a specific part of the city, and additional specific kinds of buyers as specified by each agency. Financing with this type of agency, you may get a below market interest rate, down payment assistance and other incentives. Housing finance agencies may assist eligible buyers with a reduced rate of interest, help with your down payment, and offer other assistance. These non-profit agencies exist to build up home ownership in certain neighborhoods.

Learn about low-down and no-down mortgage loan programs.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low and moderate-income families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to qualify for mortgage loans. FHA helps first-time buyers and others who might not be able to qualify for a conventional mortgage on their own, by offering mortgage insurance to private lenders. Down payment amounts for FHA mortgages are smaller than those for typical mortgage loans, even though these loans have current rates of interest. Closing costs might be financed in the mortgage, while your down payment could be as low as 3% of the total.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a reasonable rate of interest, no down payment, and reduced closing costs. Although the VA does not actually provide the mortgage 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 you close along with the first. Usually the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her home equity. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Typically you will pay a slightly higher interest rate with the loan financed by the seller.

No matter your method of pulling together your down payment, the satisfaction of reaching the goal of owning your own home will be just as sweet!

Want to discuss down payment options? Give us a call: 706-860-5514.

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