Putting Together Your Down Payment

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Many people who are looking to purchase a new home qualify for various loan programs, but they don't have much to put up the standard down payment. Want to look into getting a new house, but don't know how to get together your down payment?

Cut expenses and save. Be on the look-out for ways to reduce your expenditures to save toward a down payment. You could also try enrolling in an automatic savings plan to have a percentage of your payroll automatically moved into savings. You would be wise to 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 may decide to move into less expensive housing, or skip a family vacation.

Sell things you don't really need and get a part-time job. Try to get a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can make an exhaustive inventory of items you may be able to sell. Unused gold jewelry can bring a good amount from local jewelry stores. You may own collectibles you can put up for sale on an auction website, or household goods for a garage or tag sale. You might also research what any investments you own will bring if sold.

Borrow from your retirement funds. Research the details for your individual plan. Some people get down payment money by withdrawing from their IRAs or borrowing from their 401(k) plans. Be sure you know about any penalties, the way this could affect on taxes, and repayment terms.

Ask for a generous gift from your family. Many buyers sometimes get down payment help from giving parents and other family members who are willing to help them get into their own home. Your family members may be inclined to help you reach the milestone of owning your first home.

Contact housing finance agencies. Special mortgage loans are provided to buyers in specific circumstances, such as low income purchasers or buyers looking to remodel homes in a certain neighborhood, among others. With the help of a housing finance agency, you may receive an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies may assist you with a lower interest rate, help with your down payment, and provide other assistance. These non-profit agencies to build up the value of homes in particular places.

Research no-down and low-down mortgage loan programs.

• 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 significant role in helping low and moderate-income individuals qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who would not be able to qualify for a traditional loan on their own, by offering mortgage insurance to private lenders. Interest rates with an FHA loan typically feature the current interest rate, but the down payment requirements with an FHA mortgage will be lower than those of conventional loans. The down payment may be as low as three percent and the closing costs may be covered by the mortgage.

• VA mortgages

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can qualify for a VA loan, which typically offers a competitive interest rate, no down payment, and minimal closing costs. While the mortgages don't originate from the VA, the office verifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You can finance a down payment through a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage covers 80 percent. 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" mortgage, the seller commits to lend you a portion of his own equity to help you get your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Typically you will pay a slightly higher rate on the loan financed by the seller.

The satisfaction will be the same, no matter which approach you use to come up with your down payment. Your brand new home will be your reward!