An official website of the United States Government Español

Where can I get money for a down payment?

If you do not have cash for a down payment, there are several options available.

  • You can put off buying a home and start saving until you have enough money for a down payment.
  • Gifts from parents or others can also be used as down payments, as long as you can present a signed statement saying the money is a gift and not a third-party loan.
  • You can also consult with your financial advisor about withdrawing up to $10,000 from a traditional or Roth individual retirement account (IRA), without penalty. Generally, if you are under age 59 and a half, you would have to pay a 10 percent tax penalty on early withdrawals. However, if the money is used to buy, build, or rebuild a home, the penalty may be waived. Consult a trusted tax or financial advisor before making any withdrawal to see if this makes the most financial sense for you.
  • In some cases, you can borrow money to make a down payment. However, you should carefully consider that option since borrowing your down payment would increase your overall debt and your monthly payments.
  • Sometimes local non-profit or government organizations can offer you a second mortgage on special terms to replace a down payment. For eligible servicemembers or family members, VA loans do not require a down payment.

TIP: Think twice before using retirement savings on your down payment. The biggest benefit of saving in an IRA is the tax-free growth of investment earnings. If you remove the principal to fund your down payment, you’ll have less money in the retirement account to earn tax-free interest. Your savings will not grow as quickly. Consult a trusted financial or tax advisor to see if this makes the most financial sense for you.

Can't find your question? Ask us!

Submit a question