Your Down Payment

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Many folks who would like to purchase a new home qualify for a mortgage 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 the budget and build up savings. Scrutinize your budget to uncover extra money to save for your down payment. You also might enroll in an automatic savings plan at your bank to automatically have a predetermined amount from your take-home pay deposited into savings. You could look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay close to home for your family vacation.

Work a second job and sell items you don't need. Maybe you can get a second job to get your down payment money. You can also get creative about the things you might be able to sell. Multiple small items might add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you hold.

Borrow from retirement funds. Explore the details for your particular plan. Some homebuyers get down payment money from withdrawing what they need from their IRAs or borrowing from their 401(k) plans. Make sure you are knowledgeable about any penalties, the way this could affect on taxes, and repayment obligation.

Ask for help from family members. Many buyers sometimes receive down payment assistance from gracious family members who may be eager to help them get into their first home. Your family members may be willing to help you reach the goal of having your own home.

Research housing finance agencies. These agencies provide provisional loan programs for moderate and low income borrowers, buyers interested in sprucing up a home in a targeted area, and other particular types of buyers as specified by each finance agency. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment assistance and other benefits. These types of agencies can help eligible homebuyers with a lower rate of interest, get you your down payment, and provide other assistance. The primary mission of not-for-profit housing finance agencies is to promote residential ownership in particular areas.

Research no-down and low-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income individuals get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who would not be eligible for a traditional mortgage on their own, by providing mortgage insurance to the private lenders. Down payment sums for FHA loans are less than those for traditional mortgages, even though these loans come with average rates of interest. Closing costs might be included in the mortgage, while your down payment may be as low as 3% of the purchase price.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterans and service people. This particular loan does not require a down payment, has minimal closing costs, and provides the advantage of a competitive rate of interest. While the VA does not actually issue the mortgages, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, rather than having to put together the typical 20% down payment.

  • Carry-Back loans

    In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a slightly higher rate with 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 new home will be your reward!
Need to talk about down payments? Give us a call at 214-383-9400.

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