Building Your Down Payment

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Many buyers can qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new home, but aren't sure how you should get together a down payment?

Slash the budget and build up savings. Look for ways to trim your expenditures to put away money for a down payment. You also might enroll in an automatic savings plan to automatically have a specific portion of your take-home pay moved into savings. Some practical approaches to put together funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Sell items you do not need and get a part-time job. Look for a second job. This can be rough, but the temporary difficulty can help you get your down payment. In addition, you can make an exhaustive list of things you can sell. Unused gold jewelry can bring a good amount from local jewelers. A closet full of small items may add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow from retirement funds. Investigate the parameters of your particular program. You can borrow money from a 401(k) plan for a down payment or perform a withdrawal from an Individual Retirement Account. Make sure you understand the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for a gift from family. Many buyers are sometimes fortunate enough to receive help with their down payment help from thoughtful parents and other family members who are anxious to help get them in their first home. Your family members may be pleased at the chance to help you reach the goal of buying your first home.

Research housing finance agencies. Provisional mortgage programs are extended to homebuyers in certain situations, like low income homebuyers or people planning to remodel houses in a specific part of town, among others. Financing through a housing finance agency, you probably will be given a below market interest rate, down payment help and other advantages. These types of agencies can assist you with a reduced interest rate, get you your down payment, and offer other advantages. The main goal of not-for-profit housing finance agencies is promoting home ownership in particular parts of the city.

Explore no-down and low-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 an important role in aiding low to moderate-income buyers qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling homebuyers who might not be eligible for a conventional mortgage loan, to get home financing. Down payment totals for FHA loans are smaller than those of traditional mortgage loans, even though these mortgages have average rates of interest. Closing costs may be covered by the mortgage, while the down payment could be as low as 3% of the purchase price.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans qualify for a VA loan, which generally offers a low fixed interest rate, no down payment, and limited closing costs. Even though the VA doesn't provide the loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. You would finance the largest portion of the purchase price with a traditional mortgage lending institution and finance the remainder with the seller. Usually you'll pay a slightly higher rate with the loan from the seller.

No matter your method of putting together down payment money, the thrill of reaching the goal of living in your own home will be just as sweet!

Want to discuss your down payment? Give us a call: (972) 818-0022.