Building Your Down Payment

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Lots of borrowers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new house, but aren't sure how you should get together a down payment?

Tighten your belt and save. Turn your budget inside out to find extra money to save for your down payment. There are bank programs in which some of your take-home pay is automatically deposited into a savings account each pay period. You would be wise to look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Sell items you do not need and find a second job. Try to get a second job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can make a comprehensive list of items you may be able to sell. Unused gold jewelry can be sold at local jewelers. Multiple small items might add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into retirement funds. Research the specifics for your particular plan. It is possible to pull out money from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Make sure you comprehend the tax ramifications, repayment terms, and any penalties for withdrawing early.

Ask for a generous gift from your family. First-time buyers sometimes get down payment help from giving family members who may be prepared to help them get into their first home. Your family members may be willing to help you reach the goal of having your first home.

Learn about housing finance agencies. These agencies offer special mortgage loan programs to moderate and low income buyers, buyers interested in sprucing up a residence in a specific area, and additional groups as specified by each agency. With the help of this kind of agency, you can be given a below market interest rate, down payment help and other perks. These types of agencies can assist you with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit programs exist to promote the value of homes in certain places.

Learn about low-down and no-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income individuals get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to get home financing. FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a loan. Down payment amounts for FHA mortgages are less than those for typical mortgage loans, even though these loans come with current interest rates. Closing costs can be covered by the mortgage, while the down payment can be as low as 3 percent of the total.

• VA mortgages

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a competitive interest rate, no down payment, and limited closing costs. While the VA doesn't actually provide the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Most of the time, the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. Instead of the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you some of his home equity to assist 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 finance the remaining amount with the seller. Typically, this kind of second mortgage has a higher rate of interest.

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