Putting Together Your Down Payment

Lots of folks who are looking to buy a new house can easily qualify for various loan programs, but they don't have a large sum of cash to put up a down payment. Want to buy a new home, but aren't sure how to get together your down payment?

Tighten your belt and save. Be on the look-out for ways you can reduce your monthly expenses to save toward a down payment. There are bank programs through which some of your paycheck is automatically placed into a savings account each pay period. You might look into some big expenses in your budget that you can live without, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay local for your annual vacation.

Sell items you don't really need and get a part-time job. Maybe you can find an additional job and save your earnings. You can also seriously consider the possessions you actually need and the items you migh be able to put up for sale. A closetful of small things may add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow from your retirement funds. Investigate the provisions of your specific program. It is possible to pull out money from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. Make sure you understand about any penalties, the way this could affect on your taxes, and repayment terms.

Ask for a gift from family. First-time buyers somtimes receive help with their down payment help from giving parents and other family members who may be prepared to help them get into their own home. Your family members may be pleased to help you reach the goal of owning your first home.

Research housing finance agencies. These agencies offer special mortgage loans for moderate and low income homebuyers, buyers with an interest in renovating a home within a particular part of the city, and other specific types of buyers as defined by each agency. With the help of a housing finance agency, you may be given a below market interest rate, down payment help and other benefits. Housing finance agencies may help you with a lower rate of interest, help with your down payment, and offer other advantages. The primary goal of not-for-profit housing finance agencies is to boost residence ownership in particular areas.

Learn about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income families qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who might not be eligible for a conventional loan on their own, by providing mortgage insurance to the lenders. Interest rates with an FHA mortgage usually feature the market interest rate, while the down payment for an FHA loan will be smaller than those of conventional loans. Closing costs can be covered by the mortgage, and the down payment can be as low as 3 percent of the total amount.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans qualify for a VA loan, which usually offers a low interest rate, no down payment, and minimal closing costs. Although the VA doesn't finance the loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the buyer 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 borrow the largest portion of the purchase price from a traditional mortgage lending institution and finance the remainder with the seller. Generally, this form of second mortgage has a higher rate of interest.

The satisfaction will be the same, no matter how you manage to come up with your down payment. Your brand new home will be your reward!

Want to discuss down payment options? Call us at 866-840-8745 x2.

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Carter Financial Solutions

1810 Pacific Ave
Stockton, CA 95204