We are an independent, advertising-supported comparison service. Our objective is to empower you to make confident financial decisions by giving you access to interactive tools and financial calculators, publishing original and unbiased content, and allowing you to conduct free research and information comparisons.
Issuers that Bankrate has partnerships with include American Express, Bank of America, Capital One, Chase, Citi, and Discover, among others.
Buying a house is an important life milestone, but it frequently necessitates a sizable down payment. You’re not the only one who is wondering, “How can I get money for a down payment?” Many homebuyers face this challenge, but there are various ways to overcome it.
Boosting Your Savings:
- Part-time hustle: Consider taking on a part-time job to increase your income and dedicate that extra money towards your down payment savings.
- Downsizing your living space: If you’re currently living in a larger apartment or house, consider downsizing to a smaller, more affordable space. This can save you thousands of dollars per year on rent, which you can then put towards your down payment.
- Selling unused assets: Do you have any unused assets, such as a car, jewelry, or collectibles? Selling these items can provide you with a lump sum of cash that you can use for your down payment.
Leveraging Existing Resources:
- Gift from family: Family members can contribute a gift of a lump sum of cash towards your down payment. However, keep in mind that there are tax considerations for gifts exceeding certain thresholds. Consult with a tax advisor for detailed information.
- Home equity loan or HELOC: If you currently own a home, you can tap into its equity through a home equity loan or a home equity line of credit (HELOC). This can provide you with the funds you need for a down payment on a new home.
- Retirement account withdrawal: In some cases, you may be able to withdraw up to $10,000 from your traditional, SIMPLE, or Roth IRA without penalty. However, there are tax implications to consider, so consult with a financial advisor before making any withdrawals.
Exploring Financial Assistance:
- Down payment assistance programs: Check with your state or local housing agency to see if you qualify for down payment assistance programs. These programs can provide grants, second mortgage programs, or even first-mortgage down payment assistance loans.
- VA loans: If you’re an eligible servicemember or family member, VA loans offer the advantage of not requiring a down payment.
Borrowing Money:
- Personal loan: You can consider taking out a personal loan to cover your down payment. However, keep in mind that this will increase your overall debt and monthly payments.
- Bridge loan: A bridge loan can be helpful if you’re selling your current home but haven’t closed the sale before buying a new one. This type of loan allows you to tap into the equity of your current home to use as a down payment on your new home.
Additional Tips:
- Set a realistic budget: Create a detailed budget that includes all your income and expenses. This will help you determine how much you can realistically afford to save for a down payment each month.
- Automate your savings: Set up automatic transfers from your checking account to your savings account to ensure consistent contributions towards your down payment goal.
- Seek professional advice: Consult with a financial advisor or mortgage lender to discuss your options and develop a personalized plan for saving for your down payment.
While saving for a down payment can be challenging, there are numerous ways to achieve your goal. By exploring the options outlined above, you can increase your savings, leverage existing resources, and find financial assistance to make your dream of homeownership a reality. Remember, the key is to be proactive, plan carefully, and seek professional guidance when needed.
Ask for a gift
Many first-time homebuyers have turned to family members for help with a down payment. If a friend or family member is willing to contribute money to your house, make sure to record this for your lender in a gift letter.
Reprioritize your savings goals
Your down payment isn’t the only reason you’re stashing money away. An all-encompassing examination of your finances is crucial when considering the possibility of purchasing a home. If you’re young and have been consistently contributing to an IRA or 401(k), you might think about temporarily lowering those contributions to help increase your savings for a down payment on a house. Just remember to restart those full contributions once you move in.
There are pieces of your savings strategy, however, that should not be touched. Your emergency fund should remain intact. You will require that additional buffer after you purchase a home in order to handle the regular upkeep that comes with being a homeowner.
What’s the Best Way to Save for a Mortgage Downpayment?
FAQ
Can I borrow money for a down payment?
Can someone give me money for down payment?
How not to pay a down payment?
Where can I get Down Payment Assistance?
Down payment assistance is available through state and local programs. See who can qualify for down payment grants and how to apply.
How do I save for my down payment?
Tips and Tricks to Save for Your Down Payment 1. Determine Your Expected Down Payment and Timeframe 2. Shrink Your Required Down Payment With a Special Loan 3. Take Advantage of National Down Payment Assistance Programs 4. Look Into State-Specific Down Payment Assistance and Resources 5. Pay Off Outstanding Credit Card Debt 6.
How do I get enough money for a down payment?
To gather enough money for a down payment, consider saving consistently in a high-yield savings account, exploring down payment assistance programs available in your area, receiving a financial gift from family, or tapping into retirement accounts if applicable.
How can I reduce my down payment?
1. Determine Your Expected Down Payment and Timeframe 2. Shrink Your Required Down Payment With a Special Loan 3. Take Advantage of National Down Payment Assistance Programs 4. Look Into State-Specific Down Payment Assistance and Resources 5. Pay Off Outstanding Credit Card Debt 6. Round Up and Save Your Change 7.