Putting Together Your Down Payment

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

Reduce expenses and save. Look for ways to trim your monthly expenditures to save toward a down payment. Also, you can look into bank programs through which some of your paycheck is automatically placed into a savings account every pay period. Some practical strategies to save additional funds include moving into housing that is less expensive, and staying local for your family vacation this year.

Work more and sell items you don't need. Maybe you can get a second job to get your down payment money. In addition, you can put together an exhaustive inventory of items you can sell. Unused gold jewelry can bring a good price from local jewelry stores. Maybe you have collectibles you can put up for sale at an online auction, or quality household items for a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow money from your retirement plan. Investigate the parameters of your particular program. Some homebuyers get down payment money from withdrawing funds from their Individual Retirement Accounts or pulling money out of their 401(k) programs. You will want to ensure you are clear about any penalties, the effect this may have on your taxes, and repayment obligation.

Ask for assistance from members of your family. Many homebuyers are sometimes lucky enough to receive down payment help from caring family members who are anxious to help get them in their own home. Your family members may be eager to help you reach the milestone of having your first home.

Contact housing finance agencies. These agencies offer special loan programs to low and moderate-income homebuyers, buyers interested in rehabilitating a home within a particular area, and other groups as defined by the finance agency. Working with this type of agency, you probably will receive an interest rate that is below market, down payment help and other advantages. Housing finance agencies may help you with a reduced rate of interest, help with your down payment, and provide other benefits. The central purpose of not-for-profit housing finance agencies is build up the purchase of homes in targeted parts of the city.

Find out about low-down and no-down mortgage loan programs.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income buyers qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in qualifying for mortgage loans. FHA helps first-time homebuyers and others who might not be able to qualify for a traditional loan by themselves, by providing mortgage insurance to private lenders. Interest rates for an FHA loan normally feature the market interest rate, but the down payment amounts for an FHA loan are less than those of conventional loans. Closing costs may be covered by the mortgage, while your down payment could be as low as 3 percent of the total.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has reduced closing costs, and provides a competitive interest rate. Although the mortgage loans are not actually issued by the VA, the office certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remaining amount with the seller. Often, this form of second mortgage has a higher rate of interest.

No matter how you gather your down payment money, the thrill of living in your own home will be just as great!

Need to talk about down payment options? Call us at 866-300-1550.