Putting Together Your Down Payment

Lots of buyers qualify for various loan programs, but they can't afford a large down payment. Here's where to get started

Tighten your belt and save. Scrutinize your budget to find ways you can cut expenses to save for your down payment. You could also decide to enroll in an automatic savings plan at your bank to have a portion of your payroll automatically deposited into savings. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your vacation.

Sell items you don't really need and find a part-time job. Maybe you can find an additional job to get your down payment money. Additionally, you can put together an exhaustive list of things you can sell. Unused gold jewelry can bring a good price from local jewelry stores. You may own desirable items you can put up for sale on an auction website, or household items for a tag or garage sale. Also, you can consider selling any investments you own.

Borrow funds from your retirement plan. Research the specifics for your individual plan. Some people get down payment money by withdrawing what they need from IRAs or borrowing from 401(k) plans. Be sure you understand the tax ramifications, your obligation for repaying funds, and possible early withdrawal penalties.

Request a generous gift from your family. Many buyers are often fortunate enough to get help with their down payment help from caring family members who are eager to help get them in their first home. Your family members may be inclined to help you reach the goal of buying your own home.

Learn about housing finance agencies. Special loan programs are extended to homebuyers in certain circumstances, such as low income buyers or future homeowners looking to renovating houses in a specific part of town, among others. With the help of this type of agency, you probably will get a below market interest rate, down payment help and other advantages. Housing finance agencies may help you with a reduced interest rate, help with your down payment, and offer other advantages. These non-profit programs to promote the value of homes in particular areas.

Learn about low-down and no-down mortgage loan programs.

• FHA mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low and moderate-income Americans get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling new homebuyers who might not qualify for a conventional mortgage loan, to obtain home financing. Down payment requirements for FHA loans are less than those of typical mortgage loans, although these loans hold average interest rates. The required down payment may be as low as three percent and the closing costs could be covered by the mortgage.

• VA mortgages

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which generally offers a competitive fixed rate of interest, no down payment, and limited closing costs. Even though the VA does not issue the loans, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you part of his own equity to assist you with your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher rate on the loan financed by the seller.

No matter how you gather down payment funds, the thrill of reaching the goal of owning your own home will be just as sweet!

Need to talk about down payment options? Call us at 3149139678.