Building Your Down Payment

Lots of people who are looking to buy a new home qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few straightforward methods that will help you put together a down payment

Cut expenses and save. Look for ways you can trim your monthly expenses to save toward a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically deposited into savings every pay period. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Work a second job and sell things you don't need. Try to find a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you really need and the items you may be able to sell. You may have desirable items you can sell on an auction website, or household goods for a tag or garage sale. Also, you can think about selling any investments you hold.

Borrow your down payment from a retirement plan. Investigate the provisions of your specific program. Some homebuyers get down payment money from withdrawing funds from their Individual Retirement Accounts or pulling funds out of 401(k) programs. Make sure you are clear about any penalties, the way this could affect on your taxes, and repayment obligation.

Request a gift from your family. First-time homebuyers sometimes get down payment assistance from thoughtful parents and other family members who may be anxious to help get them in their own home. Your family members may be pleased at the chance to help you reach the milestone of having your own home.

Learn about housing finance agencies. These types of agencies offer special loan programs to moderate and low income borrowers, buyers with an interest in sprucing up a house within a particular part of the city, and additional groups as defined by the agency. Working through a housing finance agency, you probably will receive an interest rate that is below market, down payment help and other perks. Housing finance agencies can assist eligible buyers with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit programs to boost the value of homes in certain places.

Explore no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low to moderate-income buyers qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be able to qualify for a typical mortgage loan on their own, by offering mortgage insurance to the private lenders. Down payment sums for FHA loans are smaller than those with conventional mortgages, although these loans hold current interest rates. The required down payment may be as low as three percent and the closing costs could be financed in the mortgage.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a low fixed rate of interest, no down payment, and minimal closing costs. While it's true that the loans are not actually provided by the VA, the office certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You may fund a down payment through a second mortgage that closes along with the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than putting the typical 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically, this form of second mortgage will have higher interest.

The feeling of accomplishment will be the same, no matter which approach you use to come up with the down payment. Your new home will be your reward!