Building Your Down Payment

Many borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to put together a down payment

Slash your budget and build up savings. Be on the look-out for ways to reduce your monthly expenditures to set aside funds for a down payment. You also could enroll in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into savings. You might look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your annual vacation.

Sell things you do not really need and get a second job. Maybe you can get a second job to get your down payment money. In addition, you can put together an exhaustive inventory of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. A closetful of small items can add up to a nice sum at a garage or tag sale. Also, you can consider selling any investments you hold.

Tap into retirement funds. Check the provisions of your particular program. You may borrow funds from a 401(k) for you down payment or withdraw from an Individual Retirement Account. You will want to be sure you are clear about any penalties, the way this will affect on your taxes, and repayment terms.

Ask for help from members of your family. First-time buyers somtimes get help with their down payment help from gracious family members who may be prepared to help them get into their first home. Your family members may be pleased to help you reach the goal of buying your own home.

Learn about housing finance agencies. These agencies provide provisional loan programs to moderate and low income homebuyers, buyers with an interest in remodeling a home within a particular part of the city, and additional certain types of buyers as defined by each finance agency. With the help of a housing finance agency, you can get a below market interest rate, down payment help and other advantages. Housing finance agencies may help eligible buyers with a reduced rate of interest, get you your down payment, and provide other benefits. The primary mission of non-profit housing finance agencies is boosting residential ownership in specific parts of the city.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income families qualify for mortgage loans. An office of the United States 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 mortgage loan. Interest rates with an FHA mortgage normally feature the current interest rate, but the down payment for an FHA loan will be less than those of conventional loans. The required down payment can be as low as three percent and the closing costs could be covered by the mortgage loan.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. While the VA doesn't actually finance the mortgages, it does issue a certificate of eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes with the first. Most of the time, the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower covers the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you a piece of his own equity to assist you with your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a somewhat higher interest rate with the loan from the seller.

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

Need to talk about down payments? Call us at 866-840-8745 x2.

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Carter Financial Solutions

1810 Pacific Ave
Stockton, CA 95204