Your Down Payment

Lots of folks who would like to buy a new house qualify for various loan programs, but they can't afford a large down payment. Here's where to get started

Slash the budget and build up savings. Turn your budget upside-down to uncover ways you can cut expenses to save for your down payment. You also could enroll in an automatic savings plan to automatically have a predetermined amount from your take-home pay deposited into a savings account. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, 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. Look for a second job. This can be rough, but the temporary trial can help you get your down payment. In addition, you can make an exhaustive inventory of items you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. Maybe you have desirable items you can put up for sale at an online auction, or quality household items for a garage or tag sale. You might also explore what your investments could sell for.

Borrow from retirement funds. Check the provisions of your retirement plan. Many people get down payment money by withdrawing funds from IRAs or pulling money out of 401(k) plans. Make sure to find out about the tax ramifications, repayment terms, and early withdrawal penalties.

Ask for assistance from generous family members. First-time buyers sometimes get help with their down payment help from gracious family members who may be anxious to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of owning your first home.

Contact housing finance agencies. Special mortgage loan programs are extended to homebuyers in certain situations, like low income buyers or homebuyers planning to renovating homes in a specific part of town, among others. With the help of a housing finance agency, you may get a below market interest rate, down payment assistance and other incentives. Housing finance agencies can help you with a reduced interest rate, help with your down payment, and provide other advantages. The central goal of not-for-profit housing finance agencies is to promote home ownership in specific areas.

Explore no-down and low-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income Americans get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to qualify for mortgages. FHA aids first-time buyers and others who may not be able to qualify for a typical mortgage by themselves, by providing mortgage insurance to the private lenders. Down payment sums for FHA mortgages are lower than those of typical mortgages, even though these mortgages hold current rates of interest. Closing costs can be financed within the mortgage, and your down payment can be as low as 3 percent of the total.

• VA mortgage loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a low fixed rate of interest, no down payment, and reduced closing costs. Even though the VA doesn't provide the loans, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  You can finance a down payment using a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, and the first mortgage covers 80 percent. In contrast to the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In the case of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Generally, this type of second mortgage has a higher rate of interest.