Lots of borrowers can easily qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Here are a few ideas:
Tighten your belt and save. Scrutinize your budget to uncover extra money to go toward your down payment. You also might enroll in an automatic savings plan to have a portion of your pay automatically transferred into savings. Some practical methods to put together funds include moving into less expensive housing, and staying home for your family vacation for a year or two.
Work more and sell things you don't need. Look for a second job. This can be rough, but the temporary difficulty can help you get your down payment. In addition, you can put together a comprehensive inventory of things you can sell. Broken gold jewelry can be sold at local jewelers. A closetful of small things could add up to a nice sum at a garage or tag sale. You might also look into what your investments will bring if sold.
Borrow from retirement funds. Check the provisions of your particular plan. You may pull out money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure to ask your plan representative about the tax consequences, repayment terms, and any early withdrawal penalties.
Ask for assistance from generous family members. First-time buyers are sometimes lucky enough to receive down payment assistance from gracious family members who are prepared to help them get into their own home. Your family members may be pleased to help you reach the goal of owning your first home.
Contact housing finance agencies. Provisional mortgage loans are offered to homebuyers in specific circumstances, such as low income buyers or homebuyers looking to renovating homes in a certain place, among others. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment help and other incentives. These kinds of agencies can assist eligible homebuyers with a reduced interest rate, help with your down payment, and provide other advantages. The main goal of not-for-profit housing finance agencies is to promote residence ownership in certain parts of the city.
Research no-down and low-down mortgage loan programs.
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get mortgages. FHA assists first-time homebuyers and others who may not be eligible for a traditional mortgage loan by themselves, by providing mortgage insurance to lenders. Down payment sums for FHA mortgages are smaller than those for traditional mortgage loans, even though these loans have current interest rates. The required down payment may go as low as 3 percent while the closing costs may be covered by the mortgage.
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and provides the benefit of a competitive interest rate. Even though the mortgages aren't actually issued by the VA, the department certifies borrowers by issuing eligibility certificates.
A piggy-back loan is a second mortgage that closes along with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.
In a "carry back" situation, the seller commits to loan you part of his home equity to assist you with your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lender and borrow the remaining amount from the seller. Usually this form of second mortgage will have higher interest.
The feeling of accomplishment will be the same, no matter which method you use to put together your down payment. Your brand new home will be your reward!