10 Ways to Pull Together the Down Payment for a Home

What's Hot

23 Upgrades Under $50 to Make Your House Look AwesomeAround The House

Trump Worth $10 Billion Less Than If He’d Simply Invested in Index FundsBusiness

Do This or Your iPhone Bill May SkyrocketSave

11 Places in the World Where You Can Afford to Retire in StyleMore

19 Moves That Will Help You Retire Early and in StyleFamily

What You Need to Know for 2017 Obamacare EnrollmentFamily

8 Things Rich People Buy That Make Them Look DumbAround The House

50 Ways to Make a Fast $50 (or Lots More)Grow

32 of the Highest-Paid American SpeakersMake

The 35 Two-Year Colleges That Produce the Highest EarnersCollege

5 DIY Ways to Make Your Car Smell GreatCars

Amazon Prime No Longer Pledges Free 2-Day Shipping on All ItemsMore

More Caffeine Means Less Dementia for WomenFamily

7 Household Hacks That Save You CashAround The House

5 Reasons a Roth IRA Should Be Part of Your Retirement PlanGrow

30 Awesome Things to Do in RetirementCollege

Beware These 10 Retail Sales Tricks That Get You to Spend MoreMore

9 Tips to Ensure You’ll Have Enough to RetireFamily

Homebuying still is cheaper than renting in many cities, and more buyers are eligible to borrow. But where do you find a huge wad of cash for the down payment?

If a home purchase is in your future, now is the time to start saving for the down payment. Why get going now? Because it could take a while to save up the 20 percent for a down payment.

Of course, you can buy a home with less than 20 percent down. The Federal Housing Administration has lowered down-payment requirements for mortgages it insures to as low as 3.5 percent to make it easier for buyers to get into the market.

But if you contribute less than 20 percent down on a home purchase, you’ll be required to buy mortgage insurance. It protects the lender, not the buyer, from the chance you’ll fail to make your payments.

Conventional mortgages require private mortgage insurance (PMI). Explains Investopedia:

Private mortgage insurance typically costs between 0.5 percent to 1 percent of the entire loan amount on an annual basis. On a $100,000 loan this means the homeowner could be paying as much as $1,000 a year, or $83.33 per month — assuming a 1 percent PMI fee.

With an FHA mortgage, the insurance is called a mortgage insurance premium (MIP). Click here to see the FHA’s costs and requirements.

With mortgage insurance in mind, you can understand why it pays to save up at least 20 percent before taking out a mortgage. While that’s a big job, many buyers manage it. It takes focus, discipline and, often, outside help. Here are 10 ways to get that down-payment money:

1. Look into down-payment assistance programs

You might be surprised how many programs exist to help buyers — especially first-time homebuyers. Last year, RealtyTrac counted 2,290 down-payment-assistance programs across the country.

One way to find such programs is through Down Payment Resource, which calls itself “a Web-based software company with a mission to connect people with hard-to-find financial resources.”

The site takes your address or city, estimated annual income and number of people in your household. It asks if you are an armed services veteran or a Native American. It delivers a list of programs for which you may be eligible and contact information for participating lenders in your area.

Or, look for programs near you by typing “down-payment assistance programs” and your city’s name into a search engine. Income requirements typically apply, but check to learn if you are eligible.

If you are a veteran, you may be able to buy a home with no down payment.

2. Set up a dedicated account

Get going by setting up a savings account that pays the most interest possible. If you’ll be tempted to divert the money to other needs, set up an account solely for the down payment. Comparison shop for rates at Money Talks News.

3. Put savings on auto pilot

Saving is painless and virtually unnoticeable when you establish an automatic withdrawal that pulls money monthly, twice monthly or weekly from your checking account.

4. Dedicate windfalls to your goal

Pledge to put every tax refund, gift of cash, purchase refund and work bonus into your down-payment account.

5. Stash away every raise

When you earn a raise at work, carry on as if it never happened. Have the difference between your old and new paychecks funneled automatically into your down-payment savings.

6. Sell your stuff

Sell your possessions for cash to fatten your account. Money Talks News is full of inspiration and tips about how and where to make the most money selling your things. Here’s where to start:

7. Sell your car

Pump up your savings fast by disposing of assets that have real value, like a car, boat, motorcycle or expensive sports equipment. Do without or replace the car with a cheap beater.

8. Sell taxable investments

Plan to sell investments to raise money for your down payment? If so, sell stocks, bonds, mutual funds and other investments in taxable accounts instead of touching money held in tax-deferred retirement accounts like IRAs and 401(k)s. Selling investments in tax-deferred accounts carries stiff penalties if you sell before retirement age.

Dip into retirement savings with your eyes wide open: Read “What You Need to Know Before Raiding Your Retirement Plan.”

9. Get help from family

Rules differ by lenders on whether and how much help you can get from gifts for your down payment. Zillow reviews those rules.

One example: The FHA lets borrowers apply gifts from immediate family members toward a down payment. You’ll be required to produce a “gift letter” from the giver, verifying that the money is not actually a loan. You’ll probably also need to show copies of checks or wire transfers so your lender can verify the origin of the gift..

10. Ask your employer for help

Some companies, colleges, universities, and state or local governments have programs to help employees with down payments. Ask your human resources department about possibilities where you work.

When negotiating for a job, you may be able to ask your new employer to include down-payment assistance as part of your compensation package — as a signing bonus or relocation assistance.

Are you trying to pull together the down payment for a home? Share your experience with us in the comments below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: 7 Expert Tips to Keep Pets Safe and Happy During Halloween

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,709 more deals!