Your Down Payment

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Lots of buyers qualify for various loan programs, but they don't have a large sum of cash to pay the standard down payment. Want to look into getting a new home, but aren't sure how you should get together your down payment?

Tighten your belt and save. Turn your budget inside out to discover extra money to go toward your down payment. There are bank programs in which a specific portion of your paycheck is automatically deposited into savings every pay period. Some practical ways to save additional funds include moving into a residence that is less expensive, and skipping your vacation for a year or two.

Sell items you don't need and find a part-time job. Look for an additional job. This can be exhausting, but the temporary trial can provide your down payment money. In addition, you can put together an exhaustive inventory of things you may be able to sell. Unused gold jewelry can bring a good price from local jewelry stores. A closet full of small items might add up to a fair amount at a garage or tag sale. You might also research what any investments you hold may bring if sold.

Borrow from retirement funds. Check the provisions of your particular plan. It is possible to borrow money from a 401(k) plan for a down payment or get a withdrawal from an IRA. You will want to ensure you know about any penalties, the effect this could have on income taxes, and repayment terms.

Request a generous gift from your family. First-time buyers sometimes receive down payment assistance from giving parents and other family members who may be prepared to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of owning your own home.

Contact housing finance agencies. These types of agencies provide special mortgage loans for low and moderate-income borrowers, buyers interested in remodeling a residence within a particular part of the city, and additional specific types of buyers as specified by each finance agency. Financing through this type of agency, you probably will be given a below market interest rate, down payment help and other perks. These types of agencies may help you with a lower rate of interest, get you your down payment, and provide other assistance. These non-profit programs exist to build up community in certain neighborhoods.

Learn about low-down and no-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who might not be able to qualify for a typical mortgage by themselves, by providing mortgage insurance to the lenders. Down payment totals for FHA mortgages are lower than those for conventional mortgage loans, although these loans come with average interest rates. The required down payment can go as low as 3 percent while the closing costs can be covered by the mortgage loan.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a low fixed rate of interest, no down payment, and minimal closing costs. Although the mortgages don't originate from the VA, the office verifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Generally the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to lend you a portion of his home equity to help you with your down payment funds. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a somewhat higher interest rate with the loan financed by the seller.

No matter your method of putting together your down payment, the satisfaction of reaching the goal of owning your own home will be just as sweet!

Want to discuss your down payment? Call us at 503-253-3299.

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