Putting Together Your Down Payment

Many borrowers can easily qualify for a loan, but they don't have much to put up the standard down payment. Here are a few methods that will help you put together a down payment

Tighten your belt and save. Look for ways to reduce your expenditures to set aside funds for a down payment. You might also try enrolling in an automatic savings plan to automatically have a set portion of your take-home pay deposited into savings. Some effective approaches to put together funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Work a second job and sell things you don't need. Try to get an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get creative about the things you might be able to put up for sale. Multiple small things can add up to a nice sum at a garage or tag sale. Also, you can consider selling any investments you own.

Tap into retirement funds. Research the details of your individual plan. Many people get down payment money by withdrawing from their Individual Retirement Accounts or pulling money out of their 401(k) plans. Make sure you comprehend the tax ramifications, repayment terms, and any early withdrawal penalties.

Ask for assistance from generous family members. Many homebuyers sometimes receive down payment assistance from gracious parents and other family members who are prepared to help get them in their first home. Your family members may be willing to help you reach the goal of buying your own home.

Research housing finance agencies. These types of agencies provide provisional mortgage programs for moderate and low income homebuyers, buyers with an interest in rehabilitating a home within a targeted area, and additional groups as specified by each agency. Financing with a housing finance agency, you probably will be given a below market interest rate, down payment help and other perks. These types of agencies may help eligible buyers with a reduced interest rate, get you your down payment, and provide other assistance. The primary mission of not-for-profit housing finance agencies is to promote the purchase of homes in certain places.

Explore no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgages

  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 Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get home financing. FHA offers mortgage insurance to private lenders, enabling buyers who will not qualify for a conventional mortgage, to get financing. Interest rates for an FHA mortgage are normally the current interest rate, but the down payment amounts with an FHA loan will be lower than those of conventional loans. The required down payment may be as low as three percent while the closing costs could be covered by the mortgage.

• VA mortgage loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists veterans and service people. This particular loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. While it's true that the mortgages don't originate from the VA, the office certifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. In most cases the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you a portion of his own equity to help you with your down payment money. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually this kind of second mortgage will have a higher rate of interest.

No matter how you gather your down payment, the satisfaction of living in your own home will be just as sweet!