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How Can I Come Up With a Home Down Payment?

Your home down payment is a big financial commitment. So how do you come up with that big chunk of money if you don’t have a lot in savings? Here are some suggestions.

So you’ve found a home that makes your heart explode with glee, with a kitchen fit for all the fantastic feasts you’ll make, a living room large enough to house all your friends when it comes time for the big game, and a bedroom that’s destined to grant you the best, most peaceful sleeps of your life. Congratulations! Just one question: do you know how you’re going to make your down payment?

As the first major financial step to transitioning from house hunter to homeowner, getting your down payment together can seem like a difficult task. Obviously it’s best if you have from 3 to 20% of the home’s asking price already sitting there in your savings account, waiting to be invested in your new piece of real estate… but what if you don’t? There are numerous reasons why you may – and could – be ready to buy your new house before all your financial ducks get into a row, but that doesn’t mean you can’t find the money you need for a down payment. It just means you might have to get creative. You might have more down payment options available to you than you realize. For example:

  • Look at your investment accounts. To start, while it’s not always advisable to raid your investment accounts, as many of them can come with penalties for early withdrawal – not to mention, added taxes, give it some consideration. So how badly do you want that house? If your answer is, “I can’t live without it,” you may have to accept the incurrence of fees associated with removing money from your investment accounts.. If you’re uncertain of what kind of impact your withdrawal could have on these accounts, discuss it with your financial planner to make sure you’re making the right decision – and one you won’t regret down the road.
  • Consider dipping into your retirement savings. Similarly, do you have any retirement accounts set up? You could consider pulling some of your down payment out of there – and there may not be a penalty for early withdrawal so long as you’re buying a house for the first time ever. You’ll still have to pay taxes, and you’ll also want to repay that money to make sure you don’t short-change yourself when it comes time for you to hang up your working boots. Talk to your financial planner. This could be one of the ways you could land your dream home with ease.
  • Ask if your employer has a housing program. If you don’t have either of these options available to you, there’s a longshot, but it may be worth a shot: you could talk to your boss about whether or not your work participates in a housing program that helps employees secure their home. It’s not a program every company has, but some consider helping an employee invest in a home an investment in their employees… and happy employees mean they’ll stay with the company longer. Again, it’s not standard – but you never know until you ask.
  • Look into down payment assistance programs. Another avenue to explore is whether your city or state has any down payment assistance programs. Places such as California and Atlanta have programs designed to help home buyers secure their home with a financial boost, and there are even nonprofit organizations that offer assistance to those in need of help to buy. You may need to meet predetermined qualifications in order to take advantage of these programs, but there’s no harm in investigating the options. If you’re unsure of where to start, ask your lender or banker for help in discovering what options are available to you. 
  • Ask family and friends. Lastly, you can always reach out to family and friends to see if they’re willing to help out with a loan, or better yet, gift money – some of which can be protected from taxation. There are rules and regulations that govern loan and gifted money for a down payment, including special paperwork and terms that detail the length of time before you can access the funds. But isn’t that a small price to pay for securing the home you’ve been looking for for so long?

One of these options may work for you – it just takes a little time and effort to discover which one. And once you lock it down, you’ll be one step closer to getting the keys to your new home.




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