Many people who would like to purchase a new home can easily qualify for a mortgage loan, but they don’t have a lot of cash to put up a down payment. Below are a few ways to get together a down payment

Have more questions about down payments? Call California Capital Mortgage Company at (916) 456-1000 or email us by filling out the form below. It’s our job to answer lending questions, so we’re happy to help!

Reduce expenses and save

Be on the look-out for ways to trim your monthly expenses to set aside funds for a down payment. There are bank programs in which some of your paycheck is automatically transferred into a savings account every pay period. Some effective methods to build up funds include moving into housing that is less expensive, and skipping a year’s vacation.

Sell items you do not need and get a second job

Look for an additional job. This can be rough, but the temporary trial can provide your down payment money. You can also get serious about the possessions you actually need and the items you may be able to put up for sale. A closet full of small things could add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow funds from a retirement plan

Investigate the provisions of your retirement plan. You may take out funds from a 401(k) for you down payment or withdraw from an IRA. Make sure you understand the tax consequences, repayment terms, and possible penalties for withdrawing early.

Ask for a generous gift from family

First-time homebuyers are sometimes lucky enough to receive help with their down payment assistance from thoughtful family members who may be prepared to help get them in their own home. Your family members may be pleased at the chance to help you reach the milestone of buying your own home.

Contact housing finance agencies

These agencies provide special mortgage loans to low and moderate-income borrowers, buyers interested in renovating a residence in a particular part of the city, and additional groups as defined by each finance agency. Working through this type of agency, you probably will be given a below market interest rate, down payment help and other benefits. These types of agencies may help you with a reduced rate of interest, help with your down payment, and offer other benefits. The main purpose of non-profit housing finance agencies is build up residence ownership in targeted parts of the city.

Explore no-down and low-down mortgages

FHA loans
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income individuals qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to qualify for mortgage loans. FHA aids first-time homebuyers and others who would not be eligible for a conventional mortgage by themselves, by providing mortgage insurance to the lenders. Interest rates for an FHA mortgage are typically the market interest rate, while the down payment with an FHA loan will be less than those of conventional loans. The required down payment can be as low as 3 percent and the closing costs can be included in the mortgage loan.

VA mortgages
Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and provides a competitive interest rate. Although the loans don’t originate from the VA, the office certifies applicants by issuing eligibility certificates.

Piggy-back loans
You can fund a down payment through a second mortgage that closes at the same time as the first. Most of the time, the first mortgage is for 80% of the cost of the home and the “piggyback” is for 10%. The borrower covers the remaining 10%, rather than putting the usual 20% down payment.

Carry-Back loans
In a “carry back” situation, the seller agrees to lend you part of his own equity to help you with your down payment funds. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you’ll pay a somewhat higher rate on the loan from the seller.

The feeling of accomplishment will be the same, no matter which approach you use to put together the down payment. Your brand new home will be worth it!