Putting Together Your Down Payment

Many folks who would like to purchase a new house can easily qualify for a mortgage loan, but they don't have a lot of money to put up the standard down payment. Here are a few ideas:

Tighten your belt and save. Scrutinize the budget to discover extra money to go toward your down payment. There are bank programs in which some of your paycheck is automatically transferred into savings every pay period. Some effective methods to put together funds include moving into housing that is less expensive, and staying local for your family vacation this year.

Sell things you don't need and get a part-time job. Maybe you can find a second job to get your down payment money. You can also seriously consider the possessions you actually need and the items you may be able to sell. Maybe you own collectibles you can put up for sale at an online auction, or quality household goods for a garage or tag sale. You might also look into what your investments will bring if sold.

Borrow your down payment from your retirement plan. Research the specifics for your particular plan. You can take out money from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Make sure you comprehend the tax ramifications, your obligation for repaying funds, and penalties for withdrawing early.

Ask for a generous gift from family. Many buyers are often lucky enough to receive help with their down payment assistance from giving family members who may be anxious to help get them in their own home. Your family members may be willing to help you reach the goal of owning your first home.

Research housing finance agencies. These agencies offer special loan programs to low and moderate-income homebuyers, buyers interested in sprucing up a house within a targeted part of the city, and other specific kinds of buyers as defined by each agency. Financing through a housing finance agency, you probably will get an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies may help you with a lower interest rate, get you your down payment, and offer other benefits. The primary goal of not-for-profit housing finance agencies is to boost residence ownership in particular places.

Research no-down and low-down mortgage loans.

  • 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 role in assisting low and moderate-income buyers get mortgage loans. Part 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, enabling buyers who will not qualify for a traditional loan, to receive home financing. Down payment amounts for FHA loans are smaller than those for traditional mortgage loans, even though these mortgages hold average rates of interest. Closing costs may be financed within the mortgage, while the down payment could be as low as 3% of the total amount.

  • VA loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a low fixed rate of interest, no down payment, and limited closing costs. Even though the VA doesn't actually issue the loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Usually the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you some of his home equity to help you get your down payment money. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually this kind of second mortgage will have higher interest.

The satisfaction will be the same, no matter which method you use to put together your down payment. Your new home will be your reward!

Want to discuss down payment options? Give us a call at (773) 774-9040 Ext 121.

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