Putting Together Your Down Payment

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

Slash your budget and build up savings. Scrutinize your budget to uncover ways you can cut expenses to go toward your down payment. You also might enroll in an automatic savings plan to automatically have a set amount from your take-home pay deposited into savings. You might look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a vacation.

Work a second job and sell things you don't need. Try to get an additional job. This can be exhausting, but the temporary trial can provide your down payment money. In addition, you can put together a comprehensive list of items you can sell. Unworn gold jewelry can bring a good price from local jewelry stores. You may own collectibles you can sell at an auction website, or household items for a tag or garage sale. Also, you might want to consider selling any investments you hold.

Borrow money from your retirement plan. Check the parameters of your particular program. Some people get down payment money by withdrawing from Individual Retirement Accounts or borrowing from 401(k) plans. You will want to ensure you know about any penalties, the way this may affect on your taxes, and repayment terms.

Request a gift from family. Many buyers sometimes receive help with their down payment assistance from thoughtful parents and other family members who are willing to help them get into their own home. Your family members may be inclined to help you reach the milestone of buying your first home.

Contact housing finance agencies. These types of agencies offer provisional mortgage programs to moderate and low income borrowers, buyers interested in rehabilitating a home within a targeted part of the city, and additional groups as defined by the finance agency. Working with this kind of agency, you may get an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies may assist you with a reduced interest rate, help with your down payment, and provide other advantages. The main goal of non-profit housing finance agencies is to promote the purchase of homes in certain places.

Find out about low-down and no-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income families get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for mortgage loans. FHA aids first-time homebuyers and others who would not be able to qualify for a conventional mortgage by themselves, by offering mortgage insurance to private lenders. Down payment totals for FHA mortgages are below those with conventional mortgage loans, even though these mortgages come with current rates of interest. The required down payment can go as low as three percent and the closing costs might be included in the mortgage.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterans and service people. This special loan does not require a down payment, has limited closing costs, and provides a competitive interest rate. While the VA does not actually issue the loans, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  You can fund your down payment through a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of needing to pull together the typical 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually this form of second mortgage will have higher interest.

The satisfaction will be the same, no matter how you manage to get together your down payment. Your new home will be your reward!