Are you thinking about purchasing a new home? If so, you might be considering a FHA mortgage loan. These loans make an excellent choice for those who need a different option than traditional mortgage financing. Here at Patriot Home Mortgage, we can help work with you to determine whether or not this loan type is the right one for you.
As you prepare for application, it is important to think about the down payment you will use for your mortgage. For many, saving enough money for a down payment can feel like an impossibility. While you might not be able to put back a huge sum of money, there are numerous ways you can work towards having some money to put down on your new house. Remember, a larger down payment can provide you with a myriad of benefits, such as savings on mortgage insurance and lowered rates.
If you are working toward putting back money for a down payment, consider some of the following tips and reach out to our team to learn more about what you need to qualify for an FHA mortgage loan.
Utilize A Family Gift
In many cases, particularly for young first-time home buyers, using a family gift can be a great way to afford a down payment. If your parents are planning on contributing to your first home, see if you can acquire that money up front for a down payment rather than as a contribution toward your monthly payments.
Keep in mind that when it comes to traditional home loans, gifted funds will often require a gift letter to explain the details of the funds that you will receive. If the gifted funds make up a substantial portion of your down payment, the bank will take this into consideration. They will assume that since it is a gift, you are not as financially stable as someone who came up with the money on their own. This is where an FHA mortgage can be a better choice. These types of loans tend to be more accepting of gifted money as a down payment as long as you still have an excellent employment history and you meet other requirements.
Perhaps your family hadn’t planned to contribute to your first home, but they may be offering you a monetary gift for a different reason. Maybe you were given a substantial amount of money from your parents for your wedding or an inheritance from your grandparents. Even if the money wasn’t specifically given for your home, consider putting it toward your down payment savings. This can be an extremely beneficial investment for you to make.
Find Creative Ways To Save
Not everyone has a rich family member waiting in the wings to provide them with funding, and that is OK! There are still ways for you to focus on saving back money for a down payment. It isn’t always easy to see a way to do so, but by being creative and focused on a specific goal, you can find a way to at least save a little toward your home purchase. Take into consideration a few of the following ways you might be able to save for a down payment.
Cut Back On Extras
How often do you eat out each week? Do you stop for a big specialty coffee every morning? While we all need a pick-me-up here and there, make sure that you aren’t overspending on the extras. The best way to determine whether or not you are being excessive in your luxury spends is to spend a full month tracking where your money goes. There are even free apps out there, such as Mint, that will categorize your spending for you and track exactly how much you spend each month on things like groceries, eating out, alcohol, and bills. While you can’t stop paying your electricity, you can focus on some of the luxuries. Even a little extra each month can add up when you are saving for a down payment.
Ditch The Car Payments
Do you spend a large chunk of your money each month on car payments? If so, it might be time to reconsider. In many cases, purchasing a used vehicle that might not be as shiny or impressive as a new one off the lot will save you a ton of money each month.
Get By With Less
Do you go out and buy the latest phone every single time a new model is released? Do you head to the mall on the weekends to revamp your wardrobe? Try to focus on getting by with less while you save for your house. Think about your end goal — owning a home — and learn how to do without all the latest gadgets and electronics.
Consider FHA Mortgage Loans
Finally, if you have been putting off buying a house because you can’t manage to put together the traditional 20 percent down payment, consider an alternate option. FHA mortgage loans allow you to put down as little as 3.5 percent. Because FHA mortgage loans are backed by the government, they offer more lenient qualifications. That is why for people with less than ideal circumstances, an FHA loan can be the perfect fit.
If you are interested in applying for this type of loan, talk to our team today. We can work with you to make sure that a down payment on a house is within your reach. From tips on how to put back money to understanding what percentage would be required of you, we can help you make it plausible to purchase your dream home. Our goal at Patriot Home Mortgage is to give every hard-working citizen a chance at purchasing their own home. Contact us today for more information.