Your Down Payment

Lots of borrowers can qualify for various loan programs, but they don't have a large sum of cash to put up a down payment. Get started here

Reduce expenses and save. Scrutinize the budget to discover ways you can cut expenses to go toward your down payment. There are bank programs through which a portion of your take-home pay is automatically deposited into a savings account each pay period. You could look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay local for your family vacation.

Sell items you don't really need and get a part-time job. Perhaps you can find a second job and save your earnings. You can also seriously consider the possessions you really need and the items you could be able to sell. You might own collectibles you can put up for sale at an online auction, or quality household items for a tag or garage sale. You can also explore what your investments may bring if sold.

Borrow from your retirement funds. Investigate the parameters of your specific program. Some people get down payment money by withdrawing what they need from their IRAs or getting money out of 401(k) programs. Be sure to ask your plan representative about the tax consequences, repayment terms, and penalties for withdrawing early.

Ask for a generous gift from family. First-time buyers are often fortunate enough to receive help with their down payment help from giving parents and other family members who are eager to help get them in their first home. Your family members may be willing to help you reach the milestone of having your first home.

Research housing finance agencies. These agencies provide special mortgate loan programs to moderate and low income homebuyers, buyers with an interest in sprucing up a house in a particular part of the city, and other particular kinds of buyers as defined by each agency. Financing through this kind of agency, you may receive a below market interest rate, down payment assistance and other incentives. Housing finance agencies can help you with a lower rate of interest, get you your down payment, and offer other advantages. The primary goal of not-for-profit housing finance agencies is promoting residential ownership in specific parts of the city.

Research no-down and low-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 critical role in helping low and moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgage loans. FHA provides mortgage insurance to private lenders, making the buyers eligible for financing. Down payment sums for FHA mortgages are smaller than those for traditional mortgage loans, even though these mortgages have current rates of interest. The required down payment may be as low as 3 percent while the closing costs might be included in the mortgage loan.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which typically offers a competitive fixed rate of interest, no down payment, and reduced closing costs. While the VA doesn't actually issue the mortgage loans, it does certify eligibility to qualify for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Most of the time, the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a slightly higher rate with the loan financed by the seller.

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