Often we want to buy a house however don’t think we have the funds required to make it happen. How do I get the down payment for a house?
Get a Gift
You can get a gift from a relative for the down payment and closing costs. They can even gift you the entire amount of the down payment, and many lenders will allow it, depending on your credit score and the lender’s loan underwriting guidelines. (Keep in mind, some lenders require documentation of gift money, such as a signed letter from the donor and verification of transfer of funds.
You can also borrow from employer-sponsored 401ks to fund your down payment. On 401k loans, borrowing limits are quite generous: You can borrow up to the lesser of $50,000 or half the value of the account. That’s enough to fund a 20% down payment on a $250,000 house, or a 10% down payment on a $500,000 house.
If you have a whole life policy, you can either borrow or cash it in. Since most of these are purchased with after-tax dollars there may not be tax implications
If you have an asset that is free and clear, such as a vehicle, you may be able to get a secured loan against the value of the asset. Other assets may include art, jewelry, and comic books. Really anything of value.
DPA (Down Payment Assistance)
Several government entities offer down payment assistance programs; and they aren’t all for first-time homebuyers. Check out the Texas State Affordable Housing Corporation (TSAHC) for more information on how you may qualify for this program.
Sale of Personal Property
With verification of value and a bill of sale, the funds from the sale of personal property can be used for the down payment. Have a motorcycle you never ride? How about Grandpa’s stamp collection? Have a garage sale and get rid of all the stuff you don’t want to move with you anyway.
Some employers offer down payment assistance as a benefit to employees. These awards are eligible for down payment through FHA financing. Even if you think your employer is too small, or you won’t qualify, it doesn’t hurt to ask – it’s one work perk that can really make a difference when you need it the most.
You can use this year’s tax refund to become a homeowner. A copy of this year’s tax returns and a copy of the refund check or bank statement showing the refund amount is all that is required.
Get yourself a side hustle! Even though you may not be able to use this income to qualify if you haven’t had the job for two years, the cash earned from this second job can be used for the down payment. Pay stubs and bank statements can provide a paper trail to source the funds.
Cutting back on extras (that daily coffee drive-thru or breakfast taco), along with any of the above ideas, would get you into a home faster.