Building Your Down Payment

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Lots of borrowers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few straightforward ways to get together a down payment

Tighten your belt and save. Scrutinize the budget to uncover ways you can cut expenses to save for your down payment. There are bank programs through which a portion of your take-home pay is automatically deposited into a savings account each pay period. You could look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a vacation.

Sell things you do not need and find a part-time job. Perhaps you can get an additional job to get your down payment money. In addition, you can make a comprehensive list of items you can sell. Broken gold jewelry can be sold at local jewelers. Maybe you have desirable items you can put up for sale on an online auction, or quality household items for a tag or garage sale. Also, you might want to consider selling any investments you hold.

Borrow from a retirement plan. Research the specifics for your particular plan. Some homebuyers get down payment money by withdrawing from their IRAs or borrowing from their 401(k) plans. You will need to ensure you know about any penalties, the way this could affect on your income taxes, and repayment obligation.

Request a generous gift from family. Many homebuyers are often fortunate enough to receive help with their down payment assistance from caring parents and other family members who may be willing to help them get into their first home. Your family members may be pleased to help you reach the milestone of owning your first home.

Contact housing finance agencies. Provisional mortgage programs are given to buyers in specific circumstances, like low income purchasers or people planning to improve homes in a certain part of town, among others. Working with a housing finance agency, you may be given a below market interest rate, down payment assistance and other incentives. Housing finance agencies can assist you with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit agencies exist to build up the value of homes in certain places.

Explore no-down and low-down mortgage loans.

  • 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 assisting low and moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be eligible for a traditional mortgage loan on their own, by offering mortgage insurance to the private lenders. Interest rates with an FHA loan are generally the current interest rate, but the down payment amounts with an FHA loan will be below those of conventional loans. Closing costs can be financed in the mortgage, and the down payment can be as low as 3% of the purchase price.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan does not require a down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. Even though the VA doesn't actually finance the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    You can fund your down payment with a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a somewhat higher interest rate on the loan from 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 worth it!
Need to talk about down payment options? Give us a call: 352-347-3303.

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