Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have a lot of money to pay a down payment. We have a few ideas

Reduce expenses and save. Scrutinize your budget to find extra money to go toward your down payment. There are bank programs in which some of your paycheck is automatically deposited into savings each pay period. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or stay local for your annual vacation.

Sell items you don't need and find a second job. Maybe you can get a second job and build up your earnings. In addition, you can make a comprehensive inventory of things you may be able to sell. Unused gold jewelry can bring a good amount from local jewelry stores. Maybe you have collectibles you can put up for sale on an auction website, or household items for a tag or garage sale. You could also explore what your investments will bring if sold.

Borrow your down payment from your retirement plan. Investigate the provisions of your retirement plan. It is possible to borrow money from a 401(k) for a down payment or get a withdrawal from an Individual Retirement Account. Be sure to ask your plan representative about the tax consequences, your obligation for repayment, and any penalties for withdrawing early.

Ask for a generous gift from family. First-time homebuyers are sometimes fortunate enough to receive help with their down payment assistance from gracious parents and other family members who may be eager to help them get into their own home. Your family members may be willing to help you reach the goal of owning your first home.

Research housing finance agencies. Provisional mortgage programs are provided to buyers in specific situations, like low income homebuyers or people planning to renovating houses in a targeted area, among others. With the help of this type of agency, you can be given an interest rate that is below market, down payment help and other incentives. Housing finance agencies can assist eligible buyers with a lower rate of interest, help with your down payment, and provide other advantages. The principal mission of not-for-profit housing finance agencies is boosting residence ownership in targeted areas.

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

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to get mortgages. FHA assists first-time buyers and others who may not be able to qualify for a traditional mortgage loan by themselves, by providing mortgage insurance to the lenders. Interest rates with an FHA mortgage typically feature the current interest rate, while the down payment amounts with an FHA loan are lower than those of conventional loans. Closing costs might be financed in the mortgage, while the down payment might be as low as 3 percent of the purchase price.

• VA mortgage loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan does not require a down payment, has mimimal closing costs, and provides a competitive interest rate. Although the VA does not actually issue the mortgage loans, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  You can fund your down payment with a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the home's price, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you some of his home equity to help you get your down payment money. You would borrow the majority of the purchase price from a traditional lender and borrow the remainder from the seller. Typically you'll pay a slightly higher rate on the loan financed by the seller.

No matter your method of getting together your down payment, the satisfaction of owning your own home will be just as great!

Want to discuss down payments? Give us a call: (818)645-7035.