Your Down Payment

Many buyers qualify for a loan, but they don't have a large sum of cash to pay the standard down payment. Here are a few straightforward methods that will help you get together your down payment

Slash your budget and build up savings. Look for ways to trim your expenses to save toward a down payment. You could also try enrolling in an automatic savings plan to have a percentage of your payroll automatically deposited into savings. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your family vacation.

Work more and sell items you don't need. Maybe you can find a second job and build up your earnings. You can also get creative about the items you migh be able to put up for sale. Multiple small items can add up to a nice sum at a garage or tag sale. You could also look into what your investments may sell for.

Borrow money from your retirement plan. Investigate the provisions of your retirement plan. Some people get down payment money from withdrawing from their Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure to find out about the tax ramifications, your obligation for repayment, and any early withdrawal penalties.

Ask for help from generous members of your family. First-time buyers somtimes receive down payment help from giving family members who are prepared to help them get into their first home. Your family members may be willing to help you reach the goal of having your own home.

Learn about housing finance agencies. These types of agencies extend special mortgage programs to low and moderate-income buyers, buyers interested in rehabilitating a house within a targeted part of the city, and additional specific types of buyers as defined by the agency. Financing through a housing finance agency, you can receive a below market interest rate, down payment assistance and other benefits. These types of agencies can assist you with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit agencies were established to build up the value of homes in certain places.

Research no-down and low-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans. FHA aids first-time homebuyers and others who might not be able to qualify for a traditional mortgage on their own, by offering mortgage insurance to the lenders. Interest rates for an FHA mortgage typically feature the market interest rate, but the down payment for an FHA mortgage are lower than those of conventional loans. Closing costs may be covered by the mortgage, while the down payment could be as low as 3% of the total amount.

  • VA loans

    VA loans are backed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a competitive interest rate, no down payment, and limited closing costs. Although the mortgages don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Generally the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a somewhat higher rate with the loan from the seller.

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

Want to discuss down payment options? Give us a call at 218-237-5128.

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