Your Down Payment

Many buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new home, but don't know how to get together your down payment?

Cut expenses and save. Scrutinize your budget to find ways you can cut expenses to go toward your down payment. Also, you can look into bank programs through which a portion of your paycheck is automatically placed into a savings account every pay period. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.

Sell things you don't really need and find a second job. Maybe you can find an additional job and build up your earnings. You can also get creative about the things you can put up for sale. You might have collectibles you can put up for sale at an auction website, or quality household goods for a tag or garage sale. Also, you might want to look into selling any investments you own.

Borrow from your retirement plan. Investigate the provisions of your particular plan. Some people get down payment money by withdrawing what they need from their Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure you understand about any penalties, the effect this may have on taxes, and repayment terms.

Request a generous gift from your family. First-time homebuyers are sometimes lucky enough to receive down payment help from gracious parents and other family members who are willing to help them get into their own home. Your family members may be inclined to help you reach the goal of buying your first home.

Learn about housing finance agencies. Special mortgage loans are extended to homebuyers in specific situations, such as low income homebuyers or people planning to renovating homes in a specific part of town, among others. With the help of a housing finance agency, you can get an interest rate that is below market, down payment assistance and other perks. These types of agencies may assist eligible homebuyers with a reduced interest rate, help with your down payment, and provide other benefits. These non-profit agencies to build up home ownership in certain places.

Research no-down and low-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low to moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to qualify for mortgage loans. FHA helps first-time buyers and others who may not be able to qualify for a typical mortgage by themselves, by offering mortgage insurance to private lenders. Down payment sums for FHA loans are smaller than those with conventional mortgage loans, although these loans come with current rates of interest. Closing costs may be financed within the mortgage, and the down payment might be as low as 3% of the total.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan requires no down payment, has limited closing costs, and provides a competitive rate of interest. While the VA does not actually provide 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 closes along with the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower covers the remaining 10%, instead of having to put together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you some of his home equity to assist you with your down payment funds. In this scenario, you would finance the majority of the purchase price with a traditional lender and finance the remaining amount with the seller. Usually this type of second mortgage will have a higher rate of interest.

No matter your strategy of pulling together down payment money, the thrill of reaching the goal of living in your own home will be just as sweet!