Building Your Down Payment

Lots of borrowers qualify for a mortgage loan, but they don't have much to pay a down payment. Want to look into getting a new house, but aren't sure how you should put together a down payment?

Slash the budget and build up savings. Look for ways you can trim your monthly expenditures to put away money for a down payment. There are bank programs in which a portion of your take-home pay is automatically placed into a savings account each pay period. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.

Work a second job and sell items you do not need. Maybe you can get a second job to get your down payment money. In addition, you can put together a comprehensive inventory of things you may be able to sell. Unworn gold jewelry can bring a good price from local jewelry stores. Maybe you own desirable items you can put up for sale on an auction website, or quality household goods for a garage or tag sale. Also, you can think about selling any investments you hold.

Borrow funds from your retirement plan. Explore the details for your particular plan. It is possible to borrow funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Be sure you know about any penalties, the way this will affect on income taxes, and repayment terms.

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

Contact housing finance agencies. These agencies extend provisional loan programs to moderate and low income buyers, buyers with an interest in sprucing up a residence within a targeted part of the city, and additional groups as defined by each agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other advantages. These kinds of agencies can assist eligible buyers with a reduced interest rate, help with your down payment, and offer other advantages. These non-profit programs to promote home ownership in particular places.

Find out about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low to moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get home financing. FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage loan. Interest rates with an FHA loan usually feature the going interest rate, while the down payment with an FHA loan will be smaller than those of conventional loans. Closing costs may be covered by the mortgage, while your down payment could be as low as 3% of the purchase price.

• VA mortgage loans

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a competitive fixed rate of interest, no down payment, and limited closing costs. Even though the mortgage loans aren't actually provided by the VA, the office verifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you some of his home equity to help you get your down payment funds. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Often, this kind of second mortgage has higher interest.

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