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Where can I get money for a down payment on a home?

It depends on your situation. If you don't have cash for a down payment, there are several options available. Remember to advise your lender of your financial particulars, including that you are using one of the financial options described below.

  • Put off buying the home and keep saving until you have enough money for a down payment.
  • Get help from family members or other people you trust. For some loans, gifts can be used as down payments, as long as you can prove where the money came from and submit a signed statement saying the money is a gift and not a third-party loan.
  • You may be able to withdraw up to $10,000 from a traditional, SIMPLE, or Roth individual retirement account (IRA) without penalty. Generally, if you're under 59 and a half years old, 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 first home, the penalty may be waived. Roth IRAs work differently than other IRAs. 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.
  • Some federal programs are also available. For eligible servicemembers or family members, Department of Veterans Affairs (VA) loans do not require a down payment. In addition, the United States Department of Agriculture (USDA). USDA offers a no –down-payment mortgage program for low- and moderate- income households in eligible rural areas.

Warning: 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 grow tax-free. Your savings will not grow as quickly.