Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new home, but don't know how to put together a down payment?

Tighten your belt and save. Turn your budget upside-down to uncover extra money to go toward your down payment. There are bank programs through which a specific portion of your take-home pay is automatically placed into savings each pay period. You would be wise to look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay local for your family vacation.

Sell items you do not need and get a part-time job. Maybe you can get a second job and save your earnings. You can also get serious about the possessions you actually need and the items you migh be able to put up for sale. A closetful of small items can add up to a fair amount at a garage or tag sale. You might also explore what any investments you have could bring if sold.

Borrow funds from your retirement plan. Check the provisions of your retirement plan. Some people get down payment money by withdrawing from Individual Retirement Accounts or getting funds out of their 401(k) plans. Make sure you are clear about any penalties, the effect this will have on taxes, and repayment obligation.

Ask for help from members of your family. Many buyers somtimes get help with their down payment assistance from thoughtful family members who may be eager to help get them in their first home. Your family members may be happy at the chance to help you reach the goal of having your own home.

Research housing finance agencies. Special mortgate loan programs are extended to homebuyers in specific situations, such as low income purchasers or people planning to renovating homes in a specific part of town, among others. Financing with a housing finance agency, you may receive an interest rate that is below market, down payment help and other incentives. Housing finance agencies may assist you with a reduced interest rate, get you your down payment, and offer other benefits. These non-profit programs were formed to build up community in certain areas.

Learn about low-down and no-down mortgage loans.

  • FHA mortgages

    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 get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who might not be eligible for a conventional mortgage on their own, by providing mortgage insurance to lenders. Interest rates for an FHA loan are usually the current interest rate, but the down payment requirements for an FHA loan will be less than those of conventional loans. Closing costs may be covered by the mortgage, and the down payment may be as low as 3 percent of the total amount.

  • VA mortgages

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a competitive fixed interest rate, no down payment, and minimal closing costs. Although the loans don't originate from the VA, the department verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes along with the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you some of his own equity to help you with your down payment funds. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Generally, this kind of second mortgage has higher interest.

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

Want to discuss your down payment? Call us at (513) 713-1515.

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