Building Your Down Payment*

Lots of buyers qualify for several different kinds of mortgages, but they don't have a lot of money to pay a down payment. Here are a few tips:

Cut expenses and save. Scrutinize your budget to uncover ways you can cut expenses to save for your down payment. There are bank programs in which a specific portion of your take-home pay is automatically placed into a savings account every pay period. Some effective approaches to build up funds include moving into less expensive housing, and skipping a year's vacation.

Sell things you do not need and get a second job. Perhaps you can get a second job to get your down payment money. You can also get creative about the items you may be able to put up for sale. Multiple small items may add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow money from a retirement plan. Investigate the parameters of your particular program. Some people get down payment money by withdrawing what they need from their Individual Retirement Accounts or getting funds out of their 401(k) programs. Make sure you comprehend the tax consequences, your obligation for repayment, and possible early withdrawal penalties.

Ask for assistance from generous members of your family. Many homebuyers sometimes get help with their down payment help from caring parents and other family members who are anxious to help them get into their first home. Your family members may be pleased to help you reach the goal of buying your first home.

Learn about housing finance agencies. These types of agencies provide provisional mortgage programs for low and moderate-income homebuyers, buyers with an interest in rehabilitating a home in a specific part of the city, and other groups as specified by each agency. Working with this kind of agency, you probably will be given a below market interest rate, down payment assistance and other perks. Housing finance agencies can assist eligible buyers with a lower rate of interest, help with your down payment, and offer other benefits. These non-profit agencies were formed to build up home ownership in certain areas.

Research no-down and low-down mortgages.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income individuals qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who may not be able to qualify for a typical loan by themselves, by providing mortgage insurance to lenders. Down payment sums for FHA mortgages are lower than those with typical mortgage loans, although these loans hold current rates of interest. Closing costs can be included in the mortgage, while your down payment could be as low as 3.5 percent of the purchase price.

• VA mortgage loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterans and service people. This specialized loan requires no down payment, has limited closing costs, and offers a competitive rate of interest. Although the mortgages are not actually provided by the VA, the office certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Usually the piggyback loan is for 10 percent of the home's price, and the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of come up with the typical 20% down payment.

*This does not constitute tax/credit advice. Please consult a tax/financial advisor regarding your specific situation. The contents of this advertisement are intended to convey general information only and not to provide tax/credit advice or opinions. The contents of this advertisement should not be construed as, and should not be relied upon for, tax/credit advice in any particular circumstance or fact situation.