Putting Together Your Down Payment

Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. We have a few ideas

Cut expenses and save. Look for ways to trim your expenditures to set aside money for a down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a predetermined portion of your take-home pay deposited into a savings account. Some practical strategies to build up funds include moving into a residence that is less expensive, and staying local for your family vacation for a year or two.

Sell things you don't really need and get a second job. Try to find an additional job. This can be rough, but the temporary trial can provide your down payment money. You can also seriously consider the possessions you actually need and the items you may be able to sell. You may own collectibles you can sell on an online auction, or quality household items for a garage or tag sale. You might also explore what your investments may sell for.

Borrow from a retirement plan. Check the parameters of your retirement program. You may borrow funds from a 401(k) for you down payment or make a withdrawal from an Individual Retirement Account. Make sure you understand the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for assistance from members of your family. Many buyers are sometimes fortunate enough to receive help with their down payment help from gracious parents and other family members who are able to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of owning your own home.

Contact housing finance agencies. Provisional mortgage loan programs are extended to homebuyers in specific circumstances, such as low income homebuyers or homebuyers looking to remodel homes in a particular neighborhood, among others. With the help of this kind of agency, you may be given a below market interest rate, down payment help and other incentives. Housing finance agencies may assist you with a lower rate of interest, help with your down payment, and offer other assistance. The main purpose of non-profit housing finance agencies is to promote the purchase of homes in targeted places.

Research no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income Americans get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgages. FHA aids first-time buyers and others who might not be eligible for a conventional loan on their own, by providing mortgage insurance to the private lenders. Down payment sums for FHA mortgages are less than those with conventional mortgage loans, although these loans hold average interest rates. The down payment can be as low as three percent and the closing costs can be financed in the mortgage.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive interest rate. While the mortgage loans don't originate from the VA, the department verifies applicants by providing eligibility certificates.

• Piggy-back loans

  You may fund a down payment using a second mortgage that closes with the first. Generally the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. Instead of the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the you borrow part of the seller's home equity.. In this scenario, you would finance the largest portion of the purchase price with a traditional lender and borrow the remainder from the seller. Usually you will pay a somewhat higher rate on the loan financed by the seller.

No matter how you gather your down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!