Creative Ways to Fund Your Down Payment

by | Sep 18, 2023

Purchasing a home is a significant milestone in one’s life, but the hurdle of securing a substantial down payment can deter many aspiring homeowners. Conventional wisdom dictates saving 20 percent of a home’s purchase price for the down payment but this can be tough. However, there are creative ways to fund your down payment that extend beyond a traditional savings account, bank loan or personal loan. In this blog, we will explore some innovative strategies that can help you achieve your homeownership dreams.

Crowdfunding Your Down Payment

Crowdfunding platforms have revolutionized fundraising by enabling individuals to reach out to a broader community for support. By utilizing platforms like GoFundMe or Kickstarter, you can create a compelling campaign detailing your dream of homeownership and the importance of your down payment. Friends, family and even strangers can financially support you. While this method may not cover the entire down payment, it can make a substantial difference in your savings.

Down Payment Assistance Programs

A down payment assistance program is an initiative offered by various government agencies, non-profit organizations or even private companies. They aim to help individuals and families overcome the financial barrier associated with making a down payment on a home purchase.

This financial aid is intended to be used exclusively for the down payment and, in some cases, closing costs associated with buying a home. It comes in various forms such as grants, forgivable loans or low-interest loans. Many are tailored to specific groups of homebuyers, such as first-time buyers, low-income individuals or families, veterans, teachers, healthcare professionals or residents of particular geographic areas who may face greater challenges in saving for a down payment.

Down Payment Assistance from Employers

Some employers offer down payment assistance programs as part of their benefits package. Check with your HR department to see if your company provides any assistance with down payments that you can leverage.

Loan Programs with Zero or Low Down Payment Requirements

Zero or low down payment loan programs are mortgage options that enable homebuyers to purchase a home with minimal or no cash upfront. Here’s a brief overview of these types of loan programs:

  • No down payment loans: These loans, such as USDA (U.S. Department of Agriculture) and VA (Veterans Affairs) loans, allow eligible borrowers to purchase a home without making any down payment. VA loans are available to those who currently or previously served our country in the armed forces, military reserves, National Guard or are surviving spouses, while USDA loans are intended for rural and some suburban homebuyers who meet specific income criteria.
  • Low down payment loans: Loans from the Federal Housing Administration (FHA loans) and conventional loans with minimum down payment options enable borrowers to buy homes with down payments as low as 3.5 percent (FHA) or 3 percent (conventional, with private mortgage insurance). These loans are more widely accessible and offer flexibility in terms of credit score requirements and borrower qualifications.

It’s essential for prospective homebuyers to carefully consider the advantages and disadvantages of zero or low down payment loan programs. While they provide opportunities for homeownership with less upfront cost, there are trade-offs, such as potential mortgage insurance premiums and in some cases, higher overall loan costs. You’ll also likely have to pay closing costs to complete the transaction. Borrowers should take into account their personal finance situation, evaluate what a reasonable loan amount and monthly mortgage payment look like and envision their long-term goals before determining which loan option is most suitable for their needs.

Use Your Tax Refund and Bonuses

Consider allocating your annual tax refund or work-related bonuses toward your down payment fund. This lump sum can significantly boost your savings without affecting your regular budget.

Side Hustles and Gig Economy Work

Exploring side gigs or gig economy work can help you generate additional income dedicated to your down payment. Ridesharing, freelance writing, online tutoring and many other opportunities can be pursued part-time to bolster your savings.

Borrowing from Retirement Accounts

While this option should be approached with caution, some retirement accounts, such as 401(k)s or IRAs, allow for penalty-free withdrawals for first-time homebuyers. Before moving forward, it’s crucial to grasp the implications and potential risks associated with this approach.

Achieving homeownership is a significant milestone with the down payment often being the biggest hurdle. While traditional savings methods are reliable, exploring creative ways to fund your down payment can expedite your path to homeownership. As you explore these options, it’s important to assess your financial situation carefully, consult with financial professionals and make informed decisions that align with your long-term financial goals.

Contact Jaro Team to Find a Loan Program that Works for You

Choose Jaro Team as your trusted local mortgage lender. We work tirelessly to tailor loan solutions that match your unique financial circumstances and homeownership goals. Our expertise and access to a wide range of loan products enable us to navigate the complexities of the mortgage industry. We ensure you’ll receive the guidance and support needed to make informed decisions and achieve your dream of homeownership. Contact us today to get started.


© 2023 Premier Mortgage Resources, LLC (“PMR”) | NMLS #1169 | 3363 Presidential Dr. #200, Meridian, ID 83642 | Equal Housing Opportunity |All information contained herein is for informational purposes only and, while every effort has been made to ensure accuracy, no guarantee is expressed or implied. Programs shown do not demonstrate all options or pricing structures. Rates, terms, programs, and underwriting policies are subject to change without notice.  This is not an offer to extend credit or a commitment to lend. All loans are subject to underwriting approval. Some products may not be available in all states and restrictions apply.  PMR is not affiliated with or an agency of the federal government.