Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they don't have much to put up a down payment. Here are a few ideas:

Tighten your belt and save. Be on the look-out for ways to trim your monthly expenditures to put away money for a down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your take-home pay deposited into savings. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a vacation.

Work a second job and sell things you don't need. Look for an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can put together a comprehensive inventory of items you may be able to sell. Unused gold jewelry can bring a good amount from local jewelry stores. You might own collectibles you can put up for sale at an auction website, or household goods for a tag or garage sale. You might also research what your investments could sell for.

Borrow from retirement funds. Research the specifics for your individual plan. You may take out funds from a 401(k) plan for you down payment or withdraw from an IRA. Make sure you are knowledgable about any penalties, the effect this will have on your taxes, and repayment terms.

Ask for assistance from family members. First-time homebuyers are often fortunate enough to receive down payment assistance from thoughtful family members who may be prepared to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of owning your first home.

Learn about housing finance agencies. Provisional loan programs are provided to buyers in specific situations, such as low income purchasers or homebuyers looking to remodel houses in a particular part of town, among others. Working with this type of agency, you may get a below market interest rate, down payment help and other benefits. These kinds of agencies can help eligible buyers with a lower rate of interest, get you your down payment, and offer other benefits. The main goal of not-for-profit housing finance agencies is promoting residential ownership in specific places.

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

  • 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 assisting low and moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to qualify for mortgage loans. FHA provides mortgage insurance to the private lenders, helping the buyers to become eligible for financing. Down payment requirements for FHA mortgages are smaller than those of conventional mortgage loans, even though these mortgages come with current interest rates. The down payment may be as low as three percent and the closing costs can be financed in the mortgage.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which usually offers a competitive interest rate, no down payment, and minimal closing costs. While it's true that the loans don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may fund your down payment through a second mortgage that closes at the same time as the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you a portion of his home equity to help you get your down payment money. You would borrow the majority of the purchase price from a traditional mortgage lender and finance the remainder with the seller. Usually you will pay a slightly higher interest rate on the loan financed by the seller.

No matter your strategy of getting together your down payment, the satisfaction of living in your own home will be just as sweet!

Need to talk about the best options for down payments? Call us: 248-644-1200.

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