Putting Together Your Down Payment
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Many people who are looking to purchase a new house can qualify for several different kinds of mortgages, but they don't have a large sum of cash for a down payment. Here are a few straightforward ways to get together a down payment:
Slash your budget and build up savings. Look for ways you can trim your monthly expenses to set aside money for a down payment. You might try enrolling in an automatic savings plan at your bank to automatically have a specific portion of your take-home pay deposited into savings. Some practical ways to put together funds include moving into less expensive housing for a brief period of time, or staying local for your vacation.
Sell things you don't need and/or get a part-time job. Perhaps you can find a second job to get your down payment money. Additionally, you can make a comprehensive inventory of things you can sell. Unused gold jewelry can bring a good price from local jewelers. Multiple small items might add up to a nice sum at a garage sale. You might also explore what any investments you have will sell for.
Borrow from retirement funds. Research the details of your individual retirement plan. Some people get down payment money by withdrawing from Individual Retirement Accounts, or pulling money out of 401(k) programs. Make sure you understand the tax ramifications, repayment terms, and possible early withdrawal penalties.
Request a gift from family. First-time homebuyers sometimes receive help with their down payment assistance from a family member who may be prepared to help get them in their first home. A family member may be eager to help you reach your goal of buying your first home.
Learn about low-down and no-down mortgages.
- FHA 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 Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to qualify for home financing. FHA helps first-time homebuyers and others who would not be able to qualify for a conventional mortgage loan by themselves, by providing mortgage insurance to the lenders. Interest rates for an FHA loan generally feature the market interest rate, but down payment amounts with an FHA loan will be lower than those of conventional loans. Closing costs may be rolled into the mortgage, while the down payment can be as low as 3.5% of the total purchase price.
- VA loans
VA loans are guaranteed by the Department of Veterans Affairs. Veterans and service members can benefit from a VA loan, which typically offers a low rate of interest, no down payment, and minimal closing costs. While mortgage loans are not actually issued by the VA, verifies applicants by issuing certificates of eligibility.
- Piggy-back loans
A piggyback loan is a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 to 15 percent of the home price, and the first mortgage finances 80 percent. In contrast to the usual 20 percent down payment, the buyer just has to cover the remaining 5 to 10 percent, yet still doesn't have to pay monthly mortgage insurance.
The feeling of accomplishment will be the same no matter which method you use to get together your down payment. Your brand new home will be your reward!
Want to discuss down payments? Call us at (480) 424-7144.