Building Your Down Payment

Lots of folks who are looking to purchase a new home can qualify for a loan, but they don't have a lot of cash to put up a down payment. Get started here

Tighten your belt and save. Be on the look-out for ways you can reduce your monthly expenditures to put away money for a down payment. Also, you can look into bank programs through which a portion of your paycheck is automatically placed into savings each pay period. Some practical approaches to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.

Work more and sell items you don't need. Try to find an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get creative about the items you can put up for sale. Multiple small items might add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow your down payment from your retirement plan. Research the specifics of your individual plan. Many homebuyers get down payment money from withdrawing funds from their Individual Retirement Accounts or borrowing from 401(k) plans. You will want to ensure you understand about any penalties, the effect this could have on your taxes, and repayment terms.

Ask for help from family members. First-time buyers are often lucky enough to receive help with their down payment help from caring family members who are able to help them get into their own home. Your family members may be willing to help you reach the goal of owning your own home.

Research housing finance agencies. Provisional mortgage programs are offered to buyers in specific situations, like low income homebuyers or buyers planning to remodel houses 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. Housing finance agencies can help eligible buyers with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit agencies to build up the value of homes 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 assisting low and moderate-income Americans get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage. Down payment amounts for FHA mortgages are smaller than those of traditional mortgages, even though these mortgages come with current rates of interest. Closing costs can be financed in the mortgage, and your down payment might be as low as 3% of the total amount.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a competitive rate of interest, no down payment, and limited closing costs. While the VA doesn't actually finance the mortgages, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    You may fund a down payment through a second mortgage that closes with the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The borrower covers the remaining 10%, instead of having to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you part of his home equity to help you get your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually this kind of second mortgage has a higher rate of interest.

The satisfaction will be the same, no matter which strategy you use to get together the down payment. Your brand new home will be worth it!

Want to discuss your down payment? Give us a call: 718-441-7000.

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