Don’t let the down payment be your downfall

When asked what is the hardest part about buying a home, many first-timers cite the lack of a down payment or difficulty in saving for one. It doesn’t have to be so, however.

When you apply for a mortgage, lenders may require that you have some skin in the game in the form of a down payment towards the cost of the property you are looking to buy. Move-up buyers may have an advantage on first-time buyers: They already live in a home. Assuming they have built-up some home equity over the years, they can sometimes translate that into the funds needed for a down payment on their move-up home.

If you are a “first-timer,” and having trouble accumulating even percent required by many first-timer mortgages, take a look at a few ways for first-timers to gather a down payment:

• Consider enlisting the help of programs offered to first-timers by organizations such as Federal Housing Administration (FHA), the Department of Housing and Urban Development (HUD), and the Department of Veterans Affairs (VA). Many offer down payment assistance programs that can lower or nearly eliminate your down payment burden and get you into a home of your own sooner than you thought possible.

• Cut your spending in other areas and focus on putting aside as much as possible every month into a down payment piggy bank. Every dollar saved is another step in the right direction.

• Ask if relatives are in a position to loan you, or give you, money to help pay for a down payment. This can impact the way your mortgage lender asses your risk level, so be sure and speak to them about your plans to accept private gifts or loans.

• Lower your current housing costs in order to save larger amounts on a regular basis. Consider sharing space with a roommate, or moving into a smaller rental to trim your costs.

You may have to scrimp and save, or temporarily adjust your lifestyle and spending habits, but the discipline is good for your financial health. And the end goal of home ownership — still considered the American Dream by many — can be a very satisfying payoff.