Your Down Payment

Many people who would like to purchase a new house qualify for various loan programs, but they don't have a large sum of cash to put up a down payment. Want to look into getting a new home, but don't know how you should put together your down payment?

Reduce expenses and save. Scrutinize the budget to discover ways you can cut expenses to save for your down payment. There are bank programs in which some of your take-home pay is automatically placed into a savings account each pay period. You could look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Work a second job and sell things you do not need. Maybe you can get a second job to get your down payment money. You can also get creative about the items you can put up for sale. A closet full of small items might add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.

Tap into your retirement funds. Check the parameters of your particular plan. It is possible to borrow money from a 401(k) plan for you down payment or make a withdrawal from an Individual Retirement Account. Be sure to find out about the tax ramifications, repayment terms, and possible penalties for withdrawing early.

Ask for assistance from members of your family. First-time buyers sometimes get help with their down payment assistance from caring family members who may be anxious to help get them in their first home. Your family members may be inclined to help you reach the milestone of owning your own home.

Contact housing finance agencies. Provisional mortgage loans are extended to homebuyers in specific circumstances, like low income buyers or homebuyers planning to remodel houses in a specific neighborhood, among others. Working through a housing finance agency, you probably will get a below market interest rate, down payment help and other advantages. Housing finance agencies can help eligible homebuyers with a lower rate of interest, help with your down payment, and offer other assistance. The main mission of not-for-profit housing finance agencies is to boost the purchase of homes in targeted parts of the city.

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

• 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 significant role in helping low and moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for financing. Down payment amounts for FHA loans are less than those with typical mortgages, although these loans come with current rates of interest. The down payment can be as low as 3 percent and the closing costs could be packaged in the mortgage.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a reasonable interest rate, no down payment, and reduced closing costs. Even though the VA does not actually issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the buyer just has to cover the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. The buyer finances the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically, this type of second mortgage will have a higher rate of interest.

The feeling of accomplishment will be the same, no matter which strategy you use to come up with your down payment. Your brand new home will be worth it!