Building Your Down Payment

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Many borrowers can easily qualify for a loan, but they can't afford a large down payment. Here are a few methods that will help you get together your down payment

Slash your budget and build up savings. Turn your budget upside-down to find extra money to go toward your down payment. You could also try enrolling in an automatic savings plan at your bank to have a percentage of your payroll automatically deposited into a savings account. Some effective methods to save additional funds include moving into housing that is less expensive, and staying home for your family vacation this year.

Sell items you don't need and find a part-time job. Look for an additional job. This can be rough, but the temporary trial can help you get your down payment. You can also get serious about the possessions you actually need and the things you may be able to put up for sale. Maybe you have desirable items you can put up for sale at an online auction, or household items for a tag or garage sale. You could also look into what any investments you hold will bring if sold.

Borrow from your retirement plan. Research the specifics for your individual plan. It is possible to borrow funds from a 401(k) for you down payment or withdraw from an IRA. Be sure to learn about the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for a gift from family. Many buyers sometimes get down payment help from thoughtful family members who are willing to help them get into their first home. Your family members may be eager to help you reach the milestone of owning your own home.

Research housing finance agencies. Special loan programs are given to buyers in certain situations, such as low income homebuyers or people looking to improve houses in a targeted place, among others. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other incentives. These types of agencies can assist you with a reduced rate of interest, get you your down payment, and offer other benefits. The central mission of non-profit housing finance agencies is boosting the purchase of homes in particular areas.

Find out about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding 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) helps individuals get FHA provides mortgage insurance to the private lenders, making the buyers eligible for a home loan. Down payment totals for FHA mortgages are lower than those with typical mortgage loans, although these mortgages have average interest rates. The down payment can be as low as three percent while the closing costs may be financed in the mortgage.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a low fixed rate of interest, no down payment, and limited closing costs. Even though the loans aren't actually provided by the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Most of the time, the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to loan you a portion of his home equity to assist you with your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a slightly higher rate on the loan financed by the seller.

The satisfaction will be the same, no matter how you manage to come up with your down payment. Your brand new home will be your reward!

Need to talk about the best options for down payments? Give us a call: 435-734-1777.
the lender confidence in your strength as a borrower and your ability to repay the loan.

Take extra care to document the sources for any monies to be used for the down payment or closing costs.

Acceptable Down Payment & Closing Costs Sources

  • Cash in a bank account
  • Mutual funds / stocks / IRA / 401K
  • Proceeds from the sale of another property
  • Gift from an immediate relative

Click here to learn more about verifying your down payment, closing costs, income and debt.