Your Down Payment

Lots of buyers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few straightforward ways to get together a down payment

Tighten your belt and save. Look for ways to reduce your monthly expenses to put away money for a down payment. Also, you can look into bank programs in which a portion of your take-home pay is automatically transferred into savings every pay period. You would be wise to look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your vacation.

Work more and sell items you do not need. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get creative about the things you can put up for sale. You may own desirable items you can sell on an online auction, or household items for a garage or tag sale. Also, you can look into selling any investments you own.

Tap into retirement funds. Investigate the provisions of your retirement plan. Some people get down payment money from withdrawing what they need from IRAs or borrowing from their 401(k) plans. Make sure you understand the tax ramifications, your obligation for repaying funds, and early withdrawal penalties.

Request a gift from your family. Many buyers are sometimes lucky enough to get down payment assistance from thoughtful parents and other family members who may be eager to help them get into their own home. Your family members may be pleased to help you reach the milestone of having your first home.

Contact housing finance agencies. These agencies provide provisional mortgage loans for low and moderate-income homebuyers, buyers interested in rehabilitating a house in a targeted area, and additional groups as specified by the agency. Working through a housing finance agency, you can receive an interest rate that is below market, down payment help and other perks. These types of agencies can help eligible buyers with a lower rate of interest, help with your down payment, and provide other advantages. The primary purpose of non-profit housing finance agencies is boosting residential ownership in specific parts of the city.

Explore no-down and low-down mortgage loan programs.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low and moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA helps first-time homebuyers and others who would not be able to qualify for a typical mortgage on their own, by providing mortgage insurance to private lenders. Interest rates with an FHA loan normally feature the market interest rate, but the down payment amounts with an FHA loan will be lower than those of conventional loans. Closing costs can be covered by the mortgage, and the down payment may be as low as 3% of the total amount.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan does not require a down payment, has limited closing costs, and provides a competitive rate of interest. While it's true that the mortgages don't originate from the VA, the office verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Most of the time, the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. Instead of the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you a portion of his own equity to help you get your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Typically you will pay a somewhat higher interest rate on the loan financed by the seller.

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