How to Find Money for Down Payment on a Mortgage

The hardest question to answer for the typical first time home buyer is, where do you get your down payment money? Do you need down payment assistance? Many mortgage programs will not let you buy the property without a certain minimum down payment--typically 20%, but there are exceptions.

If you do not know where to get your down payment, you may need a loan assistance program of some kind. But let us look at the various places that you might possibly get mortgage down payment assistance.

Where to Find Your Mortgage Down Payment

The best place to get your money for down payment is from your own earnings. So, why not try socking away your income tax refunds each year until you have enough? Many people are tempted to spend them, but if you automatically put them into a money market account or a safe investment, you may be providing your very own loan assistance! You have to be disciplined, though.

Another way to go is to look at buying a home as an investment. If you invest money, you know that the best way to do it for the average person is through a monthly investment amount--the same amount put in every month. Use this approach and save or invest the same amount of money every month until you have enough for your own mortgage down payment.

Have you any retirement money, such as in a 401(K)? If you do, you could get your money for down payment from this source. Ask a CPA about the regulations on borrowing against a retirement account in order to get mortgage down payment assistance.

Now, a somewhat more difficult approach, but one that works for a lot of people, is to take on a second job. Not a pleasant thought for you, maybe. But you could just take it on temporarily until you have the money that you need for down payment, and then quit it.

If you do not want an additional job, could you do anything to better your situation with a new job that pays more money? Have you good experience that would make you competitive to other employers willing to pay you more? Could you justify getting a raise from your current employer?

If you run your own business, could you expand it so that you make more profits? Could you discover an additional income stream, perhaps through another or a new online affiliate marketing business?

Well, the reality is that you just might not be in a position to find more money from your own income or accounts. But that does not mean that your dream has to be shattered or put on hold indefinitely. There are still other ways of finding the money you need for your mortgage down payment.

Other Loan Assistance Possibilities

Could you ask your parents or relatives for the money for down payment? This is not unusual at all if you are buying your first home. But, you have to be careful how you get it from them. It should come in the form of a fully disclosed gift, not some kind of additional loan.

Lenders do not like buyers borrowing their down payment at all and if you try that, it could kill your mortgage approval. There are regulations regarding down payment assistance in the form of gifted funds. You should check into them with your loan officer to see if it would work for you.

FHA loans only require a 3.5% down payment, but they have somewhat higher interest rates. If you have at least 3.5% of the sale price, ask your loan officer if you could qualify under FHA home loans.

If you do not have the 3.5% down payment yourself, FHA also allows someone to obtain down payment gifts.

The seller of the home could give you down payment assistance. They can place the funds you need with a non-profit organization for a small fee. The non-profit gives you the donated money at closing; you get the home; the seller gets a smooth sale; and the seller gets to write off a charitable donation on their taxes.

There are other mortgage down payment assistance programs that the government runs. If you are a military veteran, check out VA home loan.

One final thought: do you have any pending lawsuit settlements that could provide you with your money for down payment? If so, settle them quickly, even if it is for less than what you were going for. Make getting the property your top priority.

So you see, there are many methods of finding loan assistance and getting that precious down payment money you need.

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