9 Ways to Pull Together the Down Payment for a Home

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Owning a home is the American dream — that picture includes a beautiful home on our own patch of land, complete with a white picket fence.

Of course, comparison shopping for the best rate on a mortgage is critical. But even before that, you’ll need to start saving for a down payment. Here are numerous ways to cobble together the cash you’ll need.

1. Set up a dedicated account

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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 at our Solutions Center for the best savings account rates.

2. Sell your stuff

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

Here’s help getting started:

3. Sell your car

Keys and money
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Pump up your savings fast by disposing of assets that have real value, such as a car, boat, motorcycle or expensive sports equipment.

Do without a vehicle or replace the car with a cheap beater. “5 Keys to Selling Your Car for the Highest Price Possible.” If you really need the vehicle, pare back the cost of ownership with these “6 Real Ways to Save on Your Car Costs.”

4. Put savings on autopilot

Savings goals
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Saving is painless and virtually unnoticeable when you set up an automatic withdrawal with your bank.

The money comes out with no effort on your part — monthly, twice monthly or weekly from your checking account. You determine how much you save and when the draw happens.

5. Sell taxable investments

Couple and money
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Do you 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 dipping into tax-deferred retirement accounts such as IRAs and 401(k)s.

Selling investments in tax-deferred accounts carries stiff penalties if you sell before retirement age.

6. Dedicate windfalls to your goal

New home
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Pledge to put every tax refund, gift of cash, purchase refund, work bonus and — if possible — government stimulus payment into your down payment account.

7. Stash away every raise

money
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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 account.

8. Get help from family

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Rules differ by lenders on whether and how much help with your down payment you can get from gifts.

HUD –the federal Department of Housing and Urban Development, which makes rules for buyers using FHA mortgages — says buyers may accept gifts from a relative or close friend “with a clearly defined and documented interest in the borrower.”

With a gift, you’ll need to produce a “gift letter” from the giver, verifying that the money is not actually a loan. You also may need to show copies of checks or wire transfers so the lender can verify the gift’s origin.

9. Ask your employer for help

Couple in new home
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Some employers — including companies, colleges, universities, and state or local governments — have programs to help employees with down payments. Ask the human resources department where you work about possibilities.

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.

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