Your Down Payment

Many folks who would like to purchase a new home qualify for various loan programs, but they can't afford a large down payment. Here are a few methods that will help you get together a down payment

Down Payment Assistance Programs.   Lenders offer programs with down payment assistance.  Often these programs offer 97% financing with a 2% down payment assist leaving you needing just 1% down.  

Tighten your belt and save. Turn your budget inside out to discover ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically transferred into a savings account every pay period. Some effective methods to put together funds include moving into a residence that is less expensive and skipping a year's vacation.

Sell items you don't really need and get a second job. Try to get an additional job. This can be rough, but the temporary trial can provide your down payment money. You can also get creative about the items you could be able to put up for sale. A closet full of small things can add up to a nice sum at a garage or tag sale. You can also explore what any investments you hold may bring if sold.

Borrow from retirement funds. Research the specifics of your individual plan. It is possible to borrow funds from a 401(k) for a down payment or perform a withdrawal from an IRA. Make sure to find out about the tax ramifications, your obligation for repaying the money, and any penalties for withdrawing early.

Ask for help from family members. First-time homebuyers are sometimes lucky enough to receive down payment assistance from thoughtful parents and other family members who are eager to help them get into their own home. Your family members may be inclined to help you reach the goal of buying your own home.

Research housing finance agencies. Provisional loan programs are offered to homebuyers in specific circumstances, such as low income buyers or homebuyers looking to renovating houses in a specific neighborhood, among others. With the help of a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other benefits. These types of agencies can help you with a reduced rate of interest, get you your down payment, and provide other advantages. These non-profit programs exist to boost the value of homes in particular areas.

Learn about low-down and no-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low to moderate-income buyers qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling new homebuyers who may not qualify for a traditional mortgage loan, to obtain home financing. Interest rates with an FHA loan are generally the market interest rate, but the down payment with an FHA mortgage are lower than those of conventional loans. Closing costs may be financed within the mortgage, and your down payment could be as low as 3% of the total amount.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterans and service people. This particular loan requires no down payment, has minimal closing costs, and provides the advantage of a competitive rate of interest. Although the mortgage loans don't originate from the VA, the department verifies applicants by providing eligibility certificates.

• Piggy-back loans

  You can fund your down payment using a second mortgage that closes with the first. Generally the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The borrower pays the remaining 10%, rather than putting the typical 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you part of his own equity to help you with your down payment money. You would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remaining amount from the seller. Often, this type of second mortgage has higher interest.

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