Your Down Payment

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

Slash your budget and build up savings. Turn your budget upside-down to find extra money to go toward your down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into savings each pay period. Some effective ways to put together funds include moving into housing that is less expensive, and skipping your vacation for a year or two.

Work more and sell things you do not need. Perhaps you can find an additional job and save your earnings. In addition, you can put together a comprehensive inventory of items you may be able to sell. Unworn gold jewelry can be sold at local jewelers. You may own desirable items you can put up for sale at an auction website, or quality household goods for a tag or garage sale. Also, you might want to consider selling any investments you hold.

Tap into your retirement funds. Research the details of your individual plan. Many people get down payment money by withdrawing funds from their Individual Retirement Accounts or borrowing from their 401(k) plans. Be sure you understand about any penalties, the effect this could have on taxes, and repayment obligation.

Ask for a gift from family. Many buyers somtimes receive down payment help from thoughtful parents and other family members who may be prepared to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your first home.

Research housing finance agencies. Special mortgage programs are provided to homebuyers in certain circumstances, such as low income purchasers or buyers planning to remodel houses in a specific part of town, among others. Working with this type of agency, you may receive an interest rate that is below market, down payment help and other perks. Housing finance agencies can assist you with a reduced rate of interest, help with your down payment, and offer other benefits. The central purpose of non-profit housing finance agencies is build up residence ownership in specific places.

Learn about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income Americans get mortgages. 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 new homebuyers who might not be eligible for a conventional mortgage loan, to obtain home financing. Down payment totals for FHA mortgages are lower than those with traditional mortgage loans, although these mortgages come with average rates of interest. Closing costs might be covered by the mortgage, while your down payment can be as low as 3% of the total amount.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a reasonable interest rate, no down payment, and minimal closing costs. While the mortgage loans don't originate from the VA, the department certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You may fund your down payment with a second mortgage that closes with the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you a piece of his home equity to assist you with your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Usually you'll pay a slightly higher rate with the loan financed by the seller.

The satisfaction 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 the best options for down payments? Call us: 469-640-0400.

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