Your Down Payment

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Lots of borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new home, but aren't sure how you should get together your down payment?

Slash the budget and build up savings. Scrutinize the budget to find extra money to go toward your down payment. There are bank programs in which some of your paycheck is automatically placed into savings every pay period. You might look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay local for your vacation.

Work a second job and sell things you don't need. Maybe you can find a second job and save your earnings. You can also seriously consider the possessions you really need and the things you can sell. You may have desirable items you can sell at an auction website, or household items for a garage or tag sale. You might also research what your investments may sell for.

Borrow funds from your retirement plan. Explore the details of your individual plan. Some homebuyers get down payment money by withdrawing from IRAs or taking funds out of their 401(k) plans. Be sure you understand the tax consequences, your obligation for repayment, and any early withdrawal penalties.

Ask for a gift from family. Many homebuyers sometimes get down payment assistance from giving family members who may be willing to help get them in their own home. Your family members may be pleased at the chance to help you reach the milestone of owning your first home.

Contact housing finance agencies. These agencies provide special loan programs to moderate and low income homebuyers, buyers interested in rehabilitating a house within a targeted area, and additional particular kinds of buyers as defined by each agency. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment help and other incentives. These types of agencies can help eligible homebuyers with a reduced rate of interest, get you your down payment, and offer other benefits. The central purpose of not-for-profit housing finance agencies is to boost the purchase of homes in specific areas.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income individuals get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, making the buyers eligible for a home loan. Down payment amounts for FHA mortgages are lower than those of conventional mortgage loans, although these loans hold average rates of interest. The down payment can be as low as three percent while the closing costs may be financed in the mortgage.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. Even though the VA does not provide the mortgages, it does issue a certificate of eligibility to qualify for a VA loan.

  • Piggy-back loans

    You can finance your down payment using a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her equity. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher interest rate on the loan financed by the seller.

No matter your method of getting together your down payment, the thrill of living in your own home will be just as sweet!

Need to talk about down payment options? Call us: (760) 547-2080.