Building Your Down Payment

Lots of borrowers qualify for a mortgage loan, but they can't afford a large down payment. Here's where to get started

Tighten your belt and save. Be on the look-out for ways you can trim your monthly expenses to set aside funds for a down payment. You might also try enrolling in an automatic savings plan to automatically have a predetermined portion of your take-home pay deposited into your savings account. Some practical methods to build up funds include moving into housing that is less expensive, and staying home for your family vacation for a year or two.

Sell items you do not really need and get a part-time job. Maybe you can find an additional job to get your down payment money. Additionally, you can put together a comprehensive inventory of items you may be able to sell. Broken gold jewelry can bring a good amount from local jewelry stores. A closetful of small items can add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow your down payment from your retirement plan. Check the provisions of your retirement program. You can borrow money from a 401(k) for a down payment or get a withdrawal from an IRA. Be sure you know about any penalties, the way this could affect on your income taxes, and repayment terms.

Request a gift from your family. Many homebuyers somtimes receive help with their down payment assistance from thoughtful family members who are willing to help get them in their own home. Your family members may be eager to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Special mortgate loan programs are provided to buyers in specific situations, such as low income buyers or people planning to improve houses in a specific place, among others. With the help of a housing finance agency, you can be given a below market interest rate, down payment assistance and other benefits. These kinds of agencies can help eligible buyers with a reduced rate of interest, help with your down payment, and provide other benefits. These non-profit programs to promote home ownership in certain places.

Find out about low-down and no-down mortgage loan programs.

  • 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 part in assisting low to moderate-income Americans qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling homebuyers who may not be eligible for a traditional mortgage loan, to obtain home financing. Interest rates for an FHA loan are normally the current interest rate, while the down payment with an FHA mortgage are below those of conventional loans. The required down payment can go as low as three percent and the closing costs can be included in the mortgage loan.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive interest rate. Although the mortgage loans don't originate from the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment using a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you part of his home equity to help you with 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 somewhat higher interest rate with the loan financed by the seller.

The feeling of accomplishment will be the same, no matter how you manage to come up with the down payment. Your brand new home will be your reward!

Need to talk about down payment options? Call us: 248-644-1200.

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