Searching for Down Payment Money Outside Your Own Pocket

We know how exciting it is to get the first set of keys to your very own house. But before you get there, you must get past one struggle that is common to most people who want to become homeowners  — the down payment.

The mortgage down payment is an essential element in homeownership. It affects a lot of things in a mortgage. The higher the down payment, the more favorable the interest rate becomes. Also, the larger the down payment, the bigger initial equity you build.

A down payment needs a fairly big amount of money. In most cases for conventional mortgages, lenders require a 20 percent down payment to qualify an attractive rate.

Let’s take a $200,000 mortgage loan as an example. You will need to shell out $40,000 dollars upfront to cover the down payment. With such a huge amount of money, some people back out and postpone their homeownership plans.

There are many ways you can come up with that money. You can do it the old fashion way by saving up for it. This method usually takes time. But if you have patience, you can come up with these funds just by saving.

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Another way is to get 100 percent financing. This solves the problem by getting rid of the down payment. However, because the lender will finance the full value of a home, they consider this as a riskier option. This is why the eligibility requirements for this kind of loan is more stringent.

If you think you can’t qualify for a zero down payment financing and it will take you forever to save up for a 20 percent down payment, it’s still not the end of the line.

There are still other down payment alternatives for you to try. If you can’t find the funds from your own bank accounts, start searching for it outside your pocket.



Another way of funding the mortgage down payment is by receiving gift monies from family and relatives. Certain programs allow cash gift to be used for the down payment and the closing costs.

Lenders require that the giver provides a letter stating that the money is a gift, not a loan. It is also important that the giver provides a bank account statement to prove that the money is indeed theirs.

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While this isn’t available for all jobs, there are employers who offer homebuying assistance programs to their employees.

Large companies often use relocation assistance programs as a strategy to entice valuable recruits. Also, frontliner professionals who serve the community directly are offered with assistance loans and grants to help them with home ownership. To know if your employer offers a similar assistance, you may speak with your company’s HR resource about it.


There are many down payment assistance programs to choose from. It comes in the form of zero-interest assistance loans, non-repayable grants and mortgage credit certificates.

Assistance programs are operated by local as well as state and national government agencies. The move to bring these programs to the local level is to make it more fitted to the local applicants. Cities and counties have the best programs with qualifying rules that vary.

A lot of these programs target low- to moderate-income individuals, while some are exclusive for first-time homebuyers. The goal is to provide assistance to deserving people who just can’t afford the down payment.


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