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Building Your Down Payment

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Lots of buyers qualify for several different kinds of mortgages, but they don't have much to put up a down payment. Here are a few methods that will help you put together a down payment

Reduce expenses and save. Look for ways to trim your expenditures to put away money for a down payment. You might also decide to enroll in an automatic savings plan at your bank to automatically have a specific amount from your paycheck moved into a savings account. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.

Sell items you do not need and find a second job. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get creative about the items you may be able to put up for sale. You may have desirable items you can sell on an online auction, or quality household goods for a garage or tag sale. You could also look into what your investments could sell for.

Borrow funds from your retirement plan. Investigate the provisions of your particular plan. It is possible to take out funds from a 401(k) for a down payment or make a withdrawal from an IRA. Make sure you know about any penalties, the way this could affect on your taxes, and repayment terms.

Ask for assistance from generous members of your family. Many homebuyers are sometimes fortunate enough to get down payment help from gracious parents and other family members who may be able to help them get into their own home. Your family members may be pleased to help you reach the goal of buying your own home.

Contact housing finance agencies. These agencies extend special mortgage loans to moderate and low income buyers, buyers interested in remodeling a house in a specific part of the city, and other groups as defined by the finance agency. With the help of this kind of agency, you may get a below market interest rate, down payment assistance and other incentives. Housing finance agencies can assist you with a lower interest rate, get you your down payment, and provide other assistance. These non-profit programs were established to boost home ownership in particular neighborhoods.

Explore no-down and low-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income buyers qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who would not be eligible for a typical mortgage on their own, by providing mortgage insurance to the private lenders. Down payment sums for FHA mortgages are smaller than those of traditional mortgage loans, even though these loans have current rates of interest. The down payment can be as low as 3 percent while the closing costs may 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 reduced closing costs, and provides the benefit of a competitive interest rate. While the loans are not actually issued by the VA, the department certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment through a second mortgage that closes with the first. Most of the time, the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the homebuyer just has to pull together 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.. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a somewhat higher interest rate with the loan financed by the seller.

The satisfaction will be the same, no matter how you manage to get together your down payment. Your new home will be your reward!

Need to talk about your down payment? Give us a call at 408-296-1644.