There are many down payment financing options available, and we’re certain there’s one for you. Your dream home can become reality sooner than you imagined with just a little help. While the following are not all-inclusive, it is a good start. As always, feel free to work with Jagoe Homes to determine the best way for YOU to get the down payment necessary.
First, how much is needed for a down payment?
A down payment is a portion of the cost of a home, paid up front. Generally, the more you put down, the lower your interest rate and monthly payment will be.
Your interest rate can be lower with a good down payment because putting down more money takes some of the risk off the lender’s shoulders. When you do that, the lender can reciprocate by giving you better mortgage rates. Think of your down payment as an investment in your home and in your lending rate.
Getting the lowest mortgage rate typically requires a down payment that amounts to at least 20% of the home’s purchase price.
However, it is not uncommon to purchase a home with a down payment of 15%, 10%, or in some cases, less. Some government-backed loans, such as FHA, USDA and VA loans, are available to qualified home buyers with a down payment as little as 3.5% or no down payment.
If you haven’t already, review the different types of loans before attempting to make a decision on the type of loan that is best for you.
Another good reason for making a higher down payment is the more you pay up front, the less you owe on your mortgage. The amount of your down payment is subtracted from the total cost of a house. And this translates to lower monthly payments, depending on the number of years your loan is based on.
Sale of Current Home
You can fund your down payment using the nets proceed from the sale of your current home. “Net” means the actual amount you receive after all costs are deducted.
Buy & Save
Buy & Save is a convenient new plan to help you save the necessary down payment funds to buy your new Jagoe home. We’ll outline a schedule for you to make weekly or monthly payments, so your down payment is fully funded in time to close.
Secondary Financing
A portion of your down payment and/or closing costs can be in the form of a secured loan from a family member. However, this cannot exceed a combined 100% loan-to-value of the sales price or appraised value, whichever is lower.
Gift Funds
Your down payment can be partly or wholly funded by an outright gift of cash from a relative, employer, labor union, charitable organization, government agency or public entity.
Sale of Personal Property
Fund part or all of your down payment with the proceeds from the sale of any personal property of value other than real estate. A few examples are cars, recreational vehicles, stamps, coins, or other assets.
Collateralize Loans
With proper documentation, you can fund your down payment with loans. These are fully secured by any investment accounts or real property you own.
Savings Bonds
Government-issued bonds valued at the original purchase price or the current price can be used to fund your down payment.
Stocks and Mutual Funds
These types of investments can be used when verified by a monthly or quarterly statement provided by your stockbroker or financial institution.
Employer Purchase Guarantee Plans
If your employer guarantees to purchase your previous residence as part of your relocation, any guaranteed net proceeds can be put toward your down payment.
Employer Incentive Guarantee Plans
This includes any incentives by your employer to pay your closing costs, mortgage insurance premiums, or any portion of your cash investment.
IRAs, Thrift Savings Plans, 401(k)s, Keogh Accounts
You can use funds from these types of investments, usually at 60% of their value. A higher percentage can be used (minus Federal income tax and withdrawal penalties) if proof can be provided.
Reduce your Federal Income Tax with a Mortgage Credit Certificate (MCC).
Is a Federal income tax credit, and can assist the borrower in: Increasing your qualifying income and reducing your federal income tax liability
USDA Rural Housing Program Benefits
Many of our new homes are built in areas designated as eligible for USDA Rural Housing loans. Qualified buyers can take advantage of 100% financing with a 30-year fixed rate loan.
Veteran Administration Loan
VA Loans allow military veterans to obtain 100% financing for their new home. VA loans also qualify for a low interest rate.
Kentucky Housing Corporation
Many home buyers in Kentucky will qualify for 100% financing offered by Kentucky Housing Corp.
Garage and Yard Sales
Clean out your closets! Hold a sale for ANYTHING you just don’t want. Don’t throw anything away because people will buy just about anything. You’d be surprised. One person’s trash is another’s GOLDMINE!
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