Your Down Payment

Many buyers qualify for a mortgage loan, but they don't have a lot of money to pay a down payment. Do you want to buy a new house, but aren't sure how you should get together a down payment?

Slash the budget and build up savings. Look for ways to reduce your expenses to save toward a down payment. You may also decide to enroll in an automatic savings plan at your bank to have a percentage of your payroll automatically deposited into a savings account. You would be wise to look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a family vacation.

Sell things you do not need and get a second job. Look for an additional job. This can be exhausting, but the temporary trial can provide your down payment money. Additionally, you can make an exhaustive list of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. You may own desirable items you can put up for sale at an auction website, or quality household items for a garage or tag sale. You can also look into what your investments could sell for.

Borrow funds from your retirement plan. Investigate the provisions of your retirement plan. Many people get down payment money by withdrawing from their Individual Retirement Accounts or getting funds out of their 401(k) programs. Be sure you are knowledgeable about any penalties, the effect this could have on taxes, and repayment obligation.

Ask for assistance from generous members of your family. First-time homebuyers are sometimes fortunate enough to get help with their down payment help from gracious parents and other family members who are prepared to help them get into their first home. Your family members may be eager to help you reach the goal of owning your first home.

Research housing finance agencies. These types of agencies extend special mortgage loan programs to moderate and low income buyers, buyers interested in renovating a house within a targeted part of the city, and other certain types of buyers as defined by the finance agency. Working through this type of agency, you may get a below market interest rate, down payment assistance and other benefits. Housing finance agencies may help you with a lower interest rate, help with your down payment, and offer other benefits. The primary purpose of non-profit housing finance agencies is to promote residential ownership in particular areas.

Find out about low-down and no-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income families get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get home financing. FHA helps first-time buyers and others who would not be able to qualify for a typical loan by themselves, by providing mortgage insurance to private lenders. Interest rates with an FHA mortgage normally feature the going interest rate, while the down payment amounts with an FHA loan will be below those of conventional loans. Closing costs can be covered by the mortgage, and your down payment can be as low as 3 percent of the total.

• VA mortgages

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. Even though the loans are not actually provided by the VA, the department verifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to loan you a portion of his home equity to assist you with your down payment money. You would borrow the majority of the purchase price from a traditional lending institution and finance the remaining amount with the seller. Typically, this form of second mortgage will have a higher rate of interest.

No matter your strategy of putting together your down payment money, the satisfaction of reaching the goal of owning your own home will be just as sweet!