Building Your Down Payment

Many buyers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few methods that will help you get together a down payment

Tighten your belt and save. Look for ways to reduce your monthly expenses to save toward a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically deposited into a savings account each pay period. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a vacation.

Work more and sell things you do not need. Perhaps you can find a second job and build up your earnings. You can also get creative about the things you migh be able to sell. You might own collectibles you can sell on an auction website, or quality household items for a tag or garage sale. You could also look into what your investments may sell for.

Borrow funds from a retirement plan. Research the details for your individual plan. Some people get down payment money from withdrawing from Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you comprehend the tax ramifications, your obligation for repayment, and possible early withdrawal penalties.

Ask for assistance from members of your family. Many buyers are sometimes fortunate enough to receive help with their down payment help from gracious parents and other family members who are able to help get them in their first home. Your family members may be happy at the chance to help you reach the milestone of buying your own home.

Research housing finance agencies. Provisional loan programs are extended to buyers in certain situations, like low income purchasers or people looking to renovating houses in a targeted place, among others. Financing through a housing finance agency, you probably will get a below market interest rate, down payment help and other advantages. These kinds of agencies may assist you with a reduced interest rate, get you your down payment, and offer other assistance. These non-profit agencies to build up community in particular places.

Explore no-down and low-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 an important part in helping low to moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be eligible for a typical loan on their own, by offering mortgage insurance to lenders. Down payment amounts for FHA mortgages are smaller than those for conventional mortgages, even though these loans have average rates of interest. Closing costs can be covered by the mortgage, and your down payment could be as low as 3 percent of the total amount.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a reasonable interest rate, no down payment, and limited closing costs. Although the VA doesn't provide the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You may finance your down payment through a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. In contrast to the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Usually you'll pay a somewhat higher interest rate on the loan from the seller.

The feeling of accomplishment will be the same, no matter which method you use to pull together your down payment. Your brand new home will be your reward!

Need to talk about down payment options? Give us a call at 703.255-5810.

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