Creative Ways To Gather Money for Your Down Payment

Creative Ways to Gather Your Down Payment Money

Embarking on the journey to homeownership often requires a substantial down payment in addition to closing costs - a financial hurdle that can be daunting for many aspiring buyers. However, the landscape of funding options extends far beyond traditional routes of scrimping and saving, and innovative approaches can pave the way for realizing homeownership dreams.

Read on for some creative ideas for coming up with your down payment money.

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1. Assistance from family

If your parents or other family members have the financial means to gift you money for your down payment, that is a perfectly acceptable way to pay your down payment.

If your parents don't have the cash on hand to pay for your down payment, but they do own a home with a large amount of equity, they can take out a Home Equity Line of Credit (HELOC) on their home to pay your down payment.

2. Crowdsourcing

Crowdsourcing has become such a popular concept that young buyers are even using it to fund their down payment. In fact, The Knot reports that nearly 20% of those registered on The Knot are requesting financial assistance for their down payment via their wedding registry. If you are getting married soon, instead of asking for physical items, request that guests put money toward a down payment for your home. Use a site like The Knot or Zola to create your wedding registry and voila! Your family and friends can easily crowdsource your down payment.

​Already married or not getting married anytime soon? Request that your birthday present be money toward your down payment. Or come up with a fun fundraiser for your friends and family to participate in. For instance, pick a month with 31 days and have your friends and family members choose a day of the month and pay that amount (i.e. friend chooses the 10th day of the month and pays $10). They are then entered to win a $50 Amazon gift card (each dollar gets one entry, so the person who chooses the 10th day is added 10 times, and the person who chooses the 30th day is entered 30 times). For a 31-day month, you net $446 to put toward your down payment.

3. Down Payment Assistance Programs

Down payment assistance programs are less creative, but many buyers do not know what options are available for them. First-time buyer programs abound, via national, state, and local programs, and through individual mortgage brokers. Talk to your loan officer to see what programs are available for you to help you make your dreams of homeownership a reality.

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For a new homebuyer who doesn't mind getting creative or doing a little research, there are a number of ways to gather funds for that crucial down payment. What are you waiting for?