Your Down Payment

Many people who would like to buy a new house can qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Here are a few tips:

Slash your budget and build up savings. Be on the look-out for ways you can reduce your expenses to set aside funds for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically transferred into savings every pay period. You could look into some big expenses in your budget that you can do without, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay local for your family vacation.

Work a second job and sell things you do not need. Maybe you can get a second job to get your down payment money. You can also get serious about the possessions you actually need and the things you migh be able to put up for sale. Multiple small items could add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow your down payment from a retirement plan. Check the parameters of your retirement program. Some people get down payment money by withdrawing from their IRAs or borrowing from their 401(k) plans. Make sure you are clear about any penalties, the effect this could have on your income taxes, and repayment obligation.

Ask for help from generous family members. First-time homebuyers somtimes receive help with their down payment help from caring family members who may be eager to help get them in their own home. Your family members may be pleased to help you reach the milestone of having your first home.

Learn about housing finance agencies. These agencies offer provisional mortgate loan programs- for low and moderate-income buyers, buyers interested in sprucing up a house in a targeted area, and additional groups as specified by the finance agency. Working with a housing finance agency, you may receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can help you with a lower interest rate, help with your down payment, and provide other advantages. These non-profit programs to build up the value of homes in particular neighborhoods.

Find out about low-down and no-down mortgages.

  • Federal Housing Administration (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 vital part in helping low and moderate-income individuals qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Interest rates with an FHA loan typically feature the current interest rate, but the down payment amounts for an FHA mortgage will be smaller than those of conventional loans. Closing costs might be covered by the mortgage, and your down payment may be as low as 3% of the total amount.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. While the mortgages don't originate from the VA, the office verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment through a second mortgage that closes with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than putting the usual 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her equity. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher interest rate on the loan from the seller.

The feeling of accomplishment will be the same, no matter which strategy you use to come up with the down payment. Your brand new home will be well worth it!

Want to discuss down payment options? Give us a call at 703.255-5810.

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