Building Your Down Payment

Lots of people who are looking to buy a new house can easily qualify for a mortgage loan, but they can't afford a large down payment. Here are a few methods that will help you get together your down payment

Slash your budget and build up savings. Scrutinize the budget to discover extra money to go toward your down payment. You might also try enrolling in an automatic savings plan to automatically have a set portion of your paycheck moved into savings. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or stay local for your family vacation.

Sell items you don't need and get a part-time job. Try to find an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the things you can put up for sale. A closet full of small items could add up to a fair amount at a garage or tag sale. You can also look into what any investments you hold could sell for.

Borrow funds from a retirement plan. Research the specifics for your individual plan. Many homebuyers get down payment money by withdrawing what they need from their Individual Retirement Accounts or borrowing from 401(k) plans. You will want to ensure you are clear about any penalties, the way this will affect on your taxes, and repayment terms.

Ask for help from members of your family. First-time buyers are often lucky enough to receive help with their down payment help from caring parents and other family members who are willing to help get them in their first home. Your family members may be happy at the chance to help you reach the goal of having your own home.

Research housing finance agencies. Provisional mortgage programs are offered to homebuyers in specific circumstances, such as low income buyers or homebuyers looking to renovating houses in a particular part of town, among others. Working with this type of agency, you probably will get an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may assist eligible buyers with a lower rate of interest, get you your down payment, and offer other assistance. The primary mission of non-profit housing finance agencies is to boost the purchase of homes in particular parts of the city.

Find out about low-down and no-down mortgage loans.

• FHA mortgages

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income Americans qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who would not be able to qualify for a traditional loan by themselves, by providing mortgage insurance to the lenders. Interest rates with an FHA mortgage are normally the current interest rate, while the down payment for an FHA mortgage will be smaller than those of conventional loans. Closing costs might be financed in the mortgage, while your down payment could be as low as 3 percent of the total amount.

• VA mortgage loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has minimal closing costs, and provides a competitive interest rate. While it's true that the loans don't originate from the VA, the office certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Usually the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to lend you a piece of his home equity to help you with your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually this form of second mortgage will have a higher rate of interest.

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