Putting Together Your Down Payment

Lots of people who would like to buy a new house qualify for a mortgage loan, but they don't have a lot of money to put up a down payment. Do you want to buy a new house, but don't know how you should get together your down payment?

Tighten your belt and save. Turn your budget inside out to discover ways you can cut expenses to save for your down payment. There are bank programs through which some of your paycheck is automatically transferred into a savings account every pay period. You could look into some big expenses in your budget 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 skip a family vacation.

Work a second job and sell things you do not need. Look for a second job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the items you may be able to put up for sale. Maybe you own collectibles you can sell at an online auction, or quality household items for a tag or garage sale. Also, you can consider selling any investments you own.

Borrow from your retirement plan. Research the specifics for your particular plan. Many homebuyers get down payment money by withdrawing funds from their IRAs or taking money out of 401(k) programs. You will want to make sure you know about any penalties, the effect this may have on taxes, and repayment terms.

Ask for a gift from your family. First-time homebuyers are often fortunate enough to receive help with their down payment assistance from giving family members who are able to help get them in their first home. Your family members may be willing to help you reach the goal of owning your own home.

Learn about housing finance agencies. These types of agencies offer special mortgage programs to low and moderate-income homebuyers, buyers with an interest in renovating a residence within a targeted area, and additional particular types of buyers as specified by each agency. Financing with this kind of agency, you may get a below market interest rate, down payment assistance and other perks. Housing finance agencies may help you with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit agencies to build up the value of homes in certain places.

Learn about low-down and no-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income individuals qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA assists first-time buyers and others who would not be able to qualify for a typical mortgage by themselves, by providing mortgage insurance to private lenders. Down payment requirements for FHA mortgages are less than those of traditional mortgages, even though these mortgages hold average interest rates. Closing costs might be included in the mortgage, while the down payment may be as low as 3% of the purchase price.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. While the VA does not actually issue the loans, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Often the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to lend you part of his home equity to help you with your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Typically you'll pay a somewhat higher interest rate with the loan financed by the seller.

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

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