Building Your Down Payment

Many buyers can qualify for several different kinds of mortgages, but they don't have a lot of money to pay a down payment. Here are a few tips:

Tighten your belt and save. Turn your budget inside out to find ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a set portion of your take-home pay deposited into a savings account. You would be wise to look into some big expenses in your spending history that you can live without, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay close to home for your annual vacation.

Work more and sell items you don't need. Look for an additional job. This can be rough, but the temporary difficulty can provide your down payment money. Additionally, you can put together an exhaustive list of items you may be able to sell. Broken gold jewelry can bring a good amount from local jewelers. Multiple small items could add up to a nice sum at a garage or tag sale. You can also look into what any investments you have will bring if sold.

Borrow from retirement funds. Check the provisions of your specific program. Many people get down payment money from withdrawing funds from their IRAs or taking funds out of 401(k) programs. Make sure to find out about the tax ramifications, your obligation for repaying the money, and penalties for withdrawing early.

Request a gift from family. First-time homebuyers somtimes get help with their down payment help from caring family members who are prepared to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your own home.

Contact housing finance agencies. Provisional mortgate loan programs are extended to homebuyers in specific circumstances, such as low income homebuyers or future homeowners looking to renovating houses in a certain part of town, among others. With the help of a housing finance agency, you probably will get an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies can help eligible homebuyers with a reduced interest rate, get you your down payment, and provide other assistance. These non-profit agencies to build up home ownership in specific neighborhoods.

Learn about low-down and no-down mortgage loans.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income Americans qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgage loans. FHA assists first-time homebuyers and others who would not be eligible for a typical mortgage loan on their own, by offering mortgage insurance to the lenders. Interest rates with an FHA loan normally feature the going interest rate, but the down payment with an FHA loan are below those of conventional loans. The required down payment can be as low as three percent while the closing costs can be included in the mortgage.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has limited closing costs, and offers a competitive interest rate. Although the loans are not actually issued by the VA, the department certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You can finance a down payment with a second mortgage that closes with the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you a piece of his own equity to help you get your down payment money. You would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remaining amount from the seller. Generally, this form of second mortgage has higher interest.

No matter how you gather your down payment money, the thrill of owning your own home will be just as great!

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