Your Down Payment

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Lots of borrowers can easily qualify for various loan programs, but they don't have a large sum of cash to put up the standard down payment. Below are a few ways to get together a down payment

Cut expenses and save. Turn your budget inside out to find ways you can cut expenses to go toward your down payment. Also, you can look into bank programs in which a portion of your take-home pay is automatically placed into savings every pay period. Some effective ways to put together funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Work a second job and sell things you don't need. Try to get a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. Additionally, you can make a comprehensive inventory of items you may be able to sell. Unused gold jewelry can bring a good amount from local jewelry stores. A closet full of small items can add up to a fair amount at a garage or tag sale. You might also explore what your investments may bring if sold.

Borrow your down payment from your retirement plan. Explore the details of your particular plan. You can borrow funds from a 401(k) for a down payment or get a withdrawal from an IRA. Make sure to ask your plan representative about the tax consequences, repayment terms, and early withdrawal penalties.

Ask for help from members of your family. First-time homebuyers sometimes get down payment assistance from thoughtful family members who may be anxious to help get them in their own home. Your family members may be pleased to help you reach the goal of buying your own home.

Contact housing finance agencies. These types of agencies offer special mortgage loans to moderate and low income homebuyers, buyers interested in sprucing up a house in a specific area, and additional specific kinds of buyers as defined by each finance agency. With the help of this type of agency, you may receive a below market interest rate, down payment assistance and other advantages. These kinds of agencies can help eligible buyers with a lower interest rate, get you your down payment, and offer other assistance. The principal purpose of non-profit housing finance agencies is promoting home ownership in specific parts of the city.

Explore no-down and low-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income Americans get mortgage loans. Part 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, enabling homebuyers who will not be eligible for a typical mortgage, to obtain a mortgage. Down payment totals for FHA loans are less than those of conventional mortgages, although these loans have average interest rates. The down payment may be as low as 3 percent and the closing costs can be financed in the mortgage loan.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a competitive rate of interest, no down payment, and limited closing costs. While the mortgage loans aren't actually financed by the VA, the department verifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

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

  • Carry-Back loans

    In the option of a seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remaining amount with the seller. Typically you will pay a slightly higher rate with the loan from the seller.

The satisfaction will be the same, no matter which approach you use to come up with your down payment. Your brand new home will be well worth it!

Need to talk about down payment options? Give us a call at (610) 647-5454.