Coming up with a down payment is one of the biggest hurdles in owning a home. However, there are several ways to get money for a down payment on a house, such as borrowing a loan, applying for a government assistance program, crowdfunding, and applying for first-time homebuyer benefits. Additionally, you may be able to save money faster if you downsize to save rent. Regardless of the option you choose, be sure to weigh the pros and cons.

What Is a Down Payment on a House?

A down payment is the money you pay upfront when purchasing a home. Down payments are expressed as a percentage of the property’s price. For example, a 10% down payment on a home worth $500,000 would be $50,000. When you apply for a mortgage, the down payment represents your ownership stake in the property. The mortgage lender will provide the remaining funds to purchase the property.

For many Americans, saving up for a down payment can take years and be challenging. It takes approximately 4.25 years for an average American household to save for a 20% down payment, which is $54,145 for a single-family home.

6 Ways to Get the Money for a Down Payment

Although you don’t always have to put 20% down to buy a home, it may still be challenging to come up with a down payment. If you don’t have enough saved, here are a few options to explore.

1. Borrowing Money for a Down Payment

If you don’t think you have enough saved to make a down payment on a property, you can borrow money through a personal loan, IRA withdrawal, home equity loan, cash-out refinance, or cash out your 401(k) or get a 401(k) loan. Each of these options comes with its own pros and cons, and some may have tax implications, for example, cashing out your 401(k), that you should learn more about before you opt for them.


  • Your monthly payments on the home loan will be smaller if you put more money down.
  • You’ll be able to enter the market quickly.
  • You may be able to save on the default insurance.


  • The funds you borrow will be included in your total debt service calculation, so you may qualify for a lower loan amount.
  • Mortgage lenders may only accept borrowed funds as a down payment amount for borrowers with a solid repayment history and a good credit rating.

When You Should Use This Option?

  • You’re not close to retirement age (if you’re borrowing a 401(k) loan)
  • You are able to afford the payment on the mortgage and the funds you borrow for the down payment.
  • You have a good credit score and repayment history.

2. Government Assistance Programs

Another option to get money for a down payment on a house is through government assistance programs. Several payment assistance programs for low-income borrowers may help you get access to low or no-down payment mortgages.

The Federal Housing Administration offers FHA loans through approved mortgage lenders. Borrowers only need a 3.5% down payment for the mortgage loan and can receive more favorable terms from lenders since the loans are government-backed and low-risk for the lenders.

“The easiest way to get a down payment for your first home is through an FHA loan,” says Teresa Dodson, debt expert and founder of Greenbacks Consulting. Dodson adds: “3.5% down is a manageable amount to come up with vs. 10%.”

Active-duty military service members and veterans may also be able to qualify for the U.S. Department of Veterans Affairs VA loans. These loans do not have any down payment requirements. You can get pre-approval for a VA loan and may be able to get low mortgage rates compared to conventional mortgages. If you’re planning to purchase a property in qualified rural areas, USDA loans are also an option worth considering for low down payment loans.


  • You may be able to avoid private mortgage insurance (PMI).
  • You may be able to help secure financing even with a very low or no down payment. The minimum down payment can be zero in some cases.
  • You may also be able to access lower interest rates compared to conventional loans, so your monthly mortgage payments may be lower.


  • There may be residency restrictions in some programs.
  • Eligibility requirements are strict.
  • The process for approval can be quite slow.

When You Should Use This Option?

  • You have moderate to low income.
  • You qualify for the assistance program.
  • You have some money saved up to put as a down payment.
  • You’re confident you’ll be able to satisfy the residency restrictions and upkeep of the property.

3. First-Time Homebuyer Benefits

If you’ve never owned a home before, it may be particularly challenging to get money for a down payment on a house. But there are many benefits and incentives you can take advantage of.

One option is the Home Possible mortgage from Freddie Mac, through which low-income borrowers can get their first mortgage with only 3% down for their home. If you’re a first-time homebuyer, you can also withdraw up to $10,000 from a Roth IRA or traditional IRA without the early withdrawal penalty.

The National Homebuyers Fund is another option for first-time homebuyers. The non-profit corporation offers buyers up to 5% of the home’s purchase price. In exchange, you’ll have to sign an agreement that you’ll live in your first home for at least five years.


  • Some programs offer grants that you don’t have to repay.
  • You may be eligible for loan options that require a very low down payment.
  • The eligibility requirements for many first-time homebuyer mortgage programs may be more lenient compared to traditional mortgages.


  • Not all programs are available in all locations.
  • There may be income limits to qualify.
  • There may be residency requirements and strict limitations on what types of homes can be purchased.

When You Should Use This Option?

  • You’re buying a home for the first time.
  • You have moderate or low income.
  • You’re planning to use the property as your primary residence.
  • You can satisfy the residency requirements for the program (if required).

4. Crowdfunding Down Payment

An unconventional way to get money for a down payment for a house is through real estate crowdfunding. Online platforms like HomeFundIt allow you to set up a crowdfunding campaign with a down payment goal. You can invite family members, friends, and people in your network to give gifts that can be used as a down payment for your new home. If you have some savings but are falling short of your goal, crowdfunding may be a good way to raise enough money to reach your goal.


  • You won’t have to repay the money you raise.
  • You may be able to enter the market sooner.
  • There are no qualification criteria, unlike government assistance programs.


  • You may not reach your goal.
  • You may have to return the gifted funds to the donors if you don’t raise enough funds.
  • You may not get higher interest rates because mortgage lenders may not view the source of the funds favorably.

When You Should Use This Option?

  • You already have some money saved for a down payment.
  • You have time on hand to wait until you collect enough money to meet your goal.
  • You’re only falling short of a small amount of money.
  • You have family and friends who would be likely to gift money.

5. Homeownership Savings Plans

A homeownership savings plan or savings account is available to first-time buyers and allows you to save for closing costs and down payment without having to pay taxes. These first-time home buyer savings accounts are available in several states with varying tax advantages. Along with the tax advantages, the accumulated interest may help you save for a down payment faster.


  • You will be able to get tax benefits on the amount you deposit and withdraw.
  • You may be able to save for a down payment sooner.


  • The money in the account can only be used for making a down payment.
  • You may have to pay taxes if you use the funds for any other purpose.

When You Should Use This Option?

  • You have enough money to consistently put aside for a down payment each year.
  • You’re not planning to purchase the home for a few years.

6. Reassessing Your Budget

If you want to get money for a down payment for a house sooner, one option is to free up enough cash so you can save at a faster rate. Make a budget or reassess the budget you already have and find ways to spend money wisely so you can save more. One option is to downsize so you can save on utilities and rent. You can also take on a roommate temporarily to save more money. For example, if you’re currently paying $1,500 rent for a two-bedroom apartment, you can move to a one-bedroom apartment for $750 rent. This will allow you to save an extra $9,000 annually.


  • You’ll be able to save money at a faster rate and may be able to speed up the homebuying process.
  • You don’t have to worry about borrowing the money and repaying it.
  • Doesn’t involve qualifying for programs and can be implemented by anyone.


  • It’ll require short-term sacrifices.
  • It may be too big of a lifestyle adjustment for some people.

When You Should Use This Option?

  • You don’t mind making a few temporary sacrifices to achieve your goal.
  • You are already saving for a down payment and want to accelerate it by one or two years.

Plan and Research To Get the Money

Homeownership is a dream for most Americans, but saving enough money for the down payment prevents many from achieving that dream. Trying to save thousands of dollars can seem impossible, but there are many ways to get money for a down payment for a home that you might not have considered before. Spend some time researching and planning to identify the best way to raise funds based on your individual circumstances and check if you qualify for a loan program that meets your needs.

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