Your Down Payment

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Lots of buyers qualify for various loan programs, but they can't afford a large down payment. We have a few suggestions

Tighten your belt and save. Turn your budget inside out to discover extra money to go toward your down payment. There are bank programs in which a portion of your take-home pay is automatically transferred into savings each pay period. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Sell things you do not need and get a part-time job. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get creative about the items you might be able to sell. A closet full of small things might add up to a fair amount at a garage or tag sale. You could also explore what your investments could bring if sold.

Borrow from your retirement funds. Check the provisions of your specific program. Many homebuyers get down payment money by withdrawing from their Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure you know about any penalties, the effect this may have on taxes, and repayment terms.

Ask for help from members of your family. First-time homebuyers sometimes receive help with their down payment help from gracious family members who may be anxious to help them get into their own home. Your family members may be pleased to help you reach the milestone of buying your own home.

Research housing finance agencies. These agencies extend special loan programs to moderate and low income buyers, buyers interested in renovating a house within a particular part of the city, and other groups as specified by each finance agency. Working with a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other incentives. Housing finance agencies may help you with a reduced rate of interest, help with your down payment, and offer other benefits. The central mission of not-for-profit housing finance agencies is build up home ownership in specific places.

Explore no-down and low-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income individuals qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get mortgages. FHA offers mortgage insurance to the private lenders, enabling new homebuyers who might not be eligible for a typical loan, to get financing. Down payment totals for FHA mortgages are lower than those with traditional mortgage loans, although these loans come with current interest rates. The down payment may go as low as 3 percent while the closing costs can be financed in the mortgage.

• VA loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can qualify for a VA loan, which usually offers a low interest rate, no down payment, and limited closing costs. Even though the VA doesn't issue the mortgage loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can finance a down payment using a second mortgage that closes at the same time as the first. Most of the time, the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to lend you part of his own equity to assist you with your down payment money. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher interest rate with 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 new home will be your reward!