• Building Your Down Payment

    Lots of buyers can qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new house, but don't know how you should put together your down payment?

  • Tighten your belt and save. Scrutinize your budget to find ways you can cut expenses to go toward your down payment. You might also decide to enroll in an automatic savings plan to have a portion of your payroll automatically moved into your savings account. Some effective approaches to save additional funds include moving into less expensive housing, and skipping your family vacation for a year or two.

    Sell things you do not need and find a second job. Maybe you can find a second job to get your down payment money. In addition, you can put together an exhaustive list of things you may be able to sell. Unworn gold jewelry can be sold at local jewelers. You may have collectibles you can sell on an auction website, or quality household goods for a tag or garage sale. Also, you can look into selling any investments you hold.

    Borrow from your retirement plan. Investigate the provisions of your particular plan. It is possible to borrow money from a 401(k) plan for a down payment or make a withdrawal from an IRA. Be sure to find out about the tax ramifications, your obligation for repaying funds, and early withdrawal penalties.

    Ask for a generous gift from your family. Many homebuyers sometimes receive help with their down payment assistance from thoughtful parents and other family members who may be eager to help them get into their first home. Your family members may be pleased at the chance to help you reach the goal of buying your own home.

    Research housing finance agencies. Provisional mortgage loan programs are given to buyers in specific situations, such as low income homebuyers or homebuyers planning to improve homes in a particular part of town, among others. Financing with this type of agency, you can get a below market interest rate, down payment assistance and other perks. These kinds of agencies may help you with a reduced interest rate, help with your down payment, and provide other assistance. The principal goal of not-for-profit housing finance agencies is to promote residential ownership in certain parts of the city.

  • Learn about low-down and no-down mortgage loans.

    • Federal Housing Administration (FHA) mortgages The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in helping low and moderate-income families qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgages. FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a loan. Down payment amounts for FHA mortgages are below those for traditional mortgage loans, although these loans come with average interest rates. Closing costs might be covered by the mortgage, and your down payment may be as low as 3% of the total amount.
    • VA mortgage loans VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a low fixed interest rate, no down payment, and reduced closing costs. While the VA doesn't actually issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.
    • Piggy-back loans You may fund a down payment through a second mortgage that closes along with the first. Often the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than putting the usual 20% down payment.
    • Carry-Back loans In a "carry back" agreement, the seller agrees to loan you some of his home equity to help you with your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional lending institution and borrow the remaining amount from the seller. Typically you will pay a somewhat higher interest rate on the loan from the seller.

    The satisfaction will be the same, no matter which method you use to get together the down payment. Your brand new home will be worth it!