Building Your Down Payment

Lots of borrowers qualify for a loan, but they can't afford a large down payment. We have a few suggestions

Slash your budget and build up savings. Be on the look-out for ways to reduce your monthly expenses to save toward a down payment. There are bank programs through which a portion of your take-home pay is automatically deposited into savings every pay period. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.

Sell items you do not need and find a second job. Try to find an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get serious about the possessions you actually need and the items you migh be able to sell. Multiple small items can add up to a nice sum at a garage or tag sale. You might also explore what your investments could bring if sold.

Tap into your retirement funds. Research the specifics of your individual plan. You may pull out money from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Be sure to learn about the tax ramifications, your obligation for repayment, and any penalties for withdrawing early.

Ask for a generous gift from family. First-time buyers are often fortunate enough to receive help with their down payment assistance from gracious family members who are willing to help them get into their first home. Your family members may be pleased to help you reach the milestone of having your own home.

Contact housing finance agencies. Provisional mortgage programs are given to homebuyers in certain circumstances, like low income purchasers or future homeowners planning to renovating homes in a specific neighborhood, among others. With the help of this kind of agency, you probably will receive an interest rate that is below market, down payment assistance and other perks. Housing finance agencies can help you with a reduced rate of interest, get you your down payment, and offer other benefits. The primary goal of non-profit housing finance agencies is promoting residence ownership in targeted areas.

Learn about low-down and no-down mortgage loan programs.

  • FHA loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low to moderate-income buyers get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get mortgage loans. FHA helps first-time homebuyers and others who may not be eligible for a typical mortgage loan on their own, by providing mortgage insurance to lenders. Interest rates with an FHA loan typically feature the current interest rate, while the down payment requirements with an FHA mortgage are below those of conventional loans. The down payment may be as low as 3 percent while the closing costs could be covered by the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan requires no down payment, has limited closing costs, and provides the advantage of a competitive rate of interest. Even though the mortgages are not actually financed by the VA, the office verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is 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" is for 10%. Rather than the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you part of his own equity to assist you with your down payment money. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher rate on the loan from the seller.

No matter how you gather down payment money, the thrill of reaching the goal of owning your own home will be just as great!

Need to talk about down payment options? Call us at (786) 262-6486.

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