Putting Together Your Down Payment

Many buyers can qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Here are a few straightforward ways to put together your down payment

Slash your budget and build up savings. Be on the look-out for ways to trim your expenses to set aside funds for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically placed into a savings account each pay period. Some practical strategies to build up funds include moving into less expensive housing, and staying home for your vacation for a year or two.

Sell things you don't really need and find a second job. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the things you could be able to sell. Multiple small things may add up to a nice sum at a garage or tag sale. You might also look into what your investments may sell for.

Borrow your down payment from a retirement plan. Explore the specifics for your particular plan. It is possible to borrow funds from a 401(k) for you down payment or make a withdrawal from an IRA. Make sure to ask your plan representative about the tax ramifications, your obligation for repaying the money, and any early withdrawal penalties.

Ask for assistance from generous members of your family. First-time homebuyers sometimes get help with their down payment assistance from giving parents and other family members who may be prepared to help get them in their first home. Your family members may be pleased to help you reach the milestone of buying your own home.

Research housing finance agencies. These agencies provide special mortgage programs to moderate and low income homebuyers, buyers with an interest in remodeling a house within a targeted area, and additional groups as defined by the agency. With the help of this kind of agency, you probably will be given a below market interest rate, down payment assistance and other advantages. These types of agencies can assist you with a lower interest rate, get you your down payment, and offer other assistance. The primary goal of not-for-profit housing finance agencies is boosting residential ownership in certain places.

Research no-down and low-down mortgage loans.

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income buyers get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages. FHA offers mortgage insurance to the private lenders, making the buyers eligible for a mortgage. Down payment totals for FHA loans are less than those with typical mortgages, even though these loans have average rates of interest. Closing costs can be covered by the mortgage, and the down payment may be as low as 3 percent of the total amount.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterans and service people. This particular loan requires no down payment, has reduced closing costs, and offers a competitive interest rate. Even though the mortgage loans don't originate from the VA, the department verifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You may finance a down payment with a second mortgage that closes at the same time as the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a somewhat higher interest rate with the loan financed by the seller.

No matter your strategy of getting together your down payment funds, the thrill of living in your own home will be just as sweet!