Where Can I Get A Down Payment?

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Traditional thinking tells us that we need to save 20 percent of the home's purchase price as a down payment; the reasoning being to avoid private mortgage insurance, which can be costly. However, if you still can't come up with a larger down payment, don't worry--you don't necessarily have to.Tip #1: Save Your PenniesThis is, of course, the most obvious way of gathering money for a down payment for a house. But remember: saving money for a down payment doesn't have to mean that the money only comes from your weekly paycheck.We suggest saving any extra money you get: year-end or holiday bonuses, tax returns, commission checks, even birthday money.Tip #2: Pay Off All DebtsBefore you even think about saving money, this should really be your primary goal. If you are able to pay off your high-interest debts, you will ultimately improve your credit score which, in turn, improves the options you'll have when shopping for a loan. Once you've paid off those debts, your disposable income increases, thereby increasing what you can put away for a down payment.Tip #3: Ask Family Members for HelpYou may wince at the idea of asking family for money, but for some, it's the only way to get a down payment. Parents, grandparents or even siblings can be a great resource and there are some loan options available that allow down payments to be made through gifts from family members.Tip #4: Explore Different Loan OptionsMany people also turn to mortgages that require very little or even zero percent down. They get what's known as a "piggyback" loan. A piggyback is a second mortgage on top of your first mortgage to cover what you don't put down. There are a few of different ways you can accomplish this. For instance, you can get a first mortgage for 80 percent of the home's purchase price and a piggyback second for the other 20 percent. This is commonly referred to as an 80/20, though this can be done in other combinations: 80/10/10 (first mortgage for 80 percent, second for 10 percent with a 10 percent down payment); or 80/15/5 (first mortgage for 80 percent, second for 15 percent, with a five percent down payment).Again, don't forget to ask your lender if the loan you're applying for allows the down payment to come from your family members.If you don't know where your down payment will come from, don't fret. There are several avenues you can take in finding it. So do your research and ask lots of questions--you'll soon be on your way to owning that new home.  Mortgage News Home Current Headlines Next Article  Refinancing | Home Loans | Home Equity Loans | My Quicken Loans Login Mortgage News | Mortgage Rates | Mortgage Calculators | Apply Online About Us | Careers | Contact Us | Feedback | Site Map | Help | Search Security and Privacy | Disclosures and Licenses | Terms of Use © 2000 - 2006 Quicken Loans Inc., All rights reserved. Lending services provided by Quicken Loans Inc., a subsidiary of Rock Holdings Inc. “Quicken Loans” is a registered service mark of Intuit Inc., used under license. Build 3210 2006-01-20 14:39:14

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