Building Your Down Payment

Lots of buyers qualify for several different kinds of mortgages, but they don't have much to put up a down payment. Below are a few straightforward ways to get together a down payment

Tighten your belt and save. Scrutinize the budget to find extra money to go toward your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically deposited into a savings account every pay period. Some practical ways to build up funds include moving into less expensive housing, and staying local for your family vacation this year.

Work more and sell items you don't need. Perhaps you can find an additional job to get your down payment money. Additionally, you can make an exhaustive inventory of things you can sell. Broken gold jewelry can be sold at local jewelers. Multiple small items may add up to a nice sum at a garage or tag sale. You could also look into what any investments you hold could sell for.

Borrow your down payment from a retirement plan. Check the provisions of your retirement plan. You may borrow money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Make sure to find out about the tax consequences, your obligation for repayment, and early withdrawal penalties.

Request a gift from family. Many buyers are sometimes fortunate enough to receive help with their down payment help from gracious family members who may be able to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Provisional mortgage loans are given to homebuyers in certain circumstances, such as low income homebuyers or future homeowners planning to improve homes in a particular area, among others. With the help of this kind of agency, you may get a below market interest rate, down payment assistance and other benefits. Housing finance agencies may assist eligible homebuyers with a reduced interest rate, help with your down payment, and offer other benefits. The main purpose of not-for-profit housing finance agencies is boosting the purchase of homes in particular parts of the city.

Find out about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for mortgage loans. FHA aids first-time homebuyers and others who might not be able to qualify for a conventional mortgage loan by themselves, by providing mortgage insurance to private lenders. Interest rates with an FHA mortgage are generally the market interest rate, while the down payment with an FHA mortgage will be lower than those of conventional loans. The required down payment may go as low as 3 percent and the closing costs may be packaged in the mortgage.

  • VA mortgages

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA loan, which usually offers a competitive fixed rate of interest, no down payment, and limited closing costs. Although the mortgage loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You can finance a down payment through a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In the case of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Usually you'll pay a somewhat higher rate on the loan financed by the seller.

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

Want to discuss down payments? Give us a call: (478) 746-2063.

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