THE MORTGAGE MINUTE
Creative Ways to Cover Your Down Payment
Think you need to save for years? Think again.
One of the biggest myths in homebuying is that you need to save up 20% for a down payment. The truth? Many buyers purchase homes with far less — and there are more options to cover your down payment than most people realize. Here are some creative, fully legal, and lender-approved ways to get it done.
1. Gift Funds from Family
A parent, grandparent, or close relative can give you money toward your down payment. Most loan programs allow it — they just require a simple gift letter confirming it doesn’t need to be repaid.
2. Down Payment Assistance Programs
Many cities, states, and nonprofits offer grants or second loans to help with your down payment or closing costs. Some don’t need to be repaid, and others come with super-low interest rates.
3. Retirement Account Loans
401(k) or TSP accounts often let you borrow from yourself without early withdrawal penalties. You’ll repay it over time, and it doesn’t hit your credit. Just make sure you can handle the repayment terms.
4. Sell Unused Assets
That motorcycle you barely ride? The sports card or sneaker collection sitting in the closet? Selling personal assets and documenting the sale is a clean way to generate funds.
5. Side Hustle or Bonus Income
Extra income from freelance work, commissions, or a recent bonus can be used — as long as we can document it properly. Talk to your lender early to plan ahead.
6. Use a HELOC on a Property You Already Own
If you’re buying a second home or investment property, you might be able to tap into the equity of your current property to fund the down payment on the next one.
The Bottom Line
You don’t need a massive savings account to buy a home. There are multiple ways to get creative — the key is planning ahead and working with a lender who knows how to structure your file. If you’re ready to explore your options, let’s talk.
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