Putting Together Your Down Payment

Lots of folks who would like to purchase a new house qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Here's where to get started

Cut expenses and save. Turn your budget inside out to uncover ways you can cut expenses to save for your down payment. You might also try enrolling in an automatic savings plan to have a portion of your payroll automatically moved into savings. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.

Sell items you don't really need and find a part-time job. Perhaps you can find a second job and save your earnings. You can also get creative about the items you could be able to put up for sale. A closetful of small things could add up to a nice sum at a garage or tag sale. You might also research what your investments could bring if sold.

Borrow money from a retirement plan. Research the details for your particular plan. You can borrow money from a 401(k) for a down payment or get a withdrawal from an Individual Retirement Account. Make sure you know about any penalties, the way this may affect on your taxes, and repayment terms.

Ask for help from generous members of your family. First-time buyers somtimes get down payment assistance from gracious family members who are willing to help get them in their own home. Your family members may be inclined to help you reach the milestone of having your own home.

Learn about housing finance agencies. Provisional mortgage programs are given to homebuyers in specific situations, such as low income purchasers or buyers looking to improve homes in a specific part of town, among others. Working through a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can help eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other advantages. The main mission of non-profit housing finance agencies is to boost residence ownership in targeted areas.

Find out about low-down and no-down mortgage loan programs.

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low to moderate-income Americans qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA aids first-time buyers and others who might not be eligible for a traditional mortgage loan by themselves, by providing mortgage insurance to the lenders. Interest rates for an FHA loan are typically the going interest rate, while the down payment amounts with an FHA loan are lower than those of conventional loans. Closing costs may be covered by the mortgage, while your down payment may be as low as 3 percent of the total amount.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a reasonable interest rate, no down payment, and limited closing costs. Even though the VA does not actually provide the 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 closes at the same time as the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Often, this form of second mortgage will have higher interest.

The feeling of accomplishment will be the same, no matter how you manage to get together your down payment. Your brand new home will be well worth it!

Need to talk about your down payment? Call us: 703.255-5810.

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