Finding the cash needed for a down payment is one of the most common challenges when buying a home.

Sometimes, borrowers don’t have the funds in their checking or savings account to make this payment. Here’s a list of 3 creative ideas for securing your down payment for your house purchase.

401k Loan

Using a loan from a retirement account with your employer is one of the best ways to assist with making a down payment. Recent laws now allow borrowers to take up to $50,000 from their 401k plan to go towards purchasing a home without receiving a tax penalty.

The key benefit with this route is that, instead of paying a bank interest on money you borrowed, you are paying yourself back with interest that will be going into your 401k. When you make payments on that loan, you are helping build your portfolio back up with the interest on the loan while continuing to receive the tax-deferral benefits.

Make sure to consult your 401k administrator before making any decisions. They can provide specifics for these loans since the options vary greatly between 401k providers.

Gift from Relative or Friend

Receiving a gift from a family member or friend is also an option when looking to get some assistance on your down payment. This gift will need to be provided along with a letter stating what the gift is for. This can help borrowers achieve the down payment necessary to purchase the home.

There are no limits on how much someone can give you for a mortgage down payment or closing costs. Make sure you check with a CPA about the latest IRS guidelines for tax implications.

IRA Loan

Much like a 401k loan, taking funds out of an IRA allows you to pay back yourself instead of paying back a bank.

For first-time home-buyers (defined as anyone who has not owned a home in the last 2 years), you can take up to $10,000 from an IRA account to help finance a home purchase with no tax penalty.

This can be a good alternative if your 401k provider will not allow you to borrow on your retirement account. You may be able to transfer some funds from a 401k into an IRA and borrow it that way.

How Much Do I Need for a Down Payment?

Here at Sunray Mortgage, the minimum down payment we require is 3% for conventional loan options, and 0% for any qualified veteran home loan borrowers.

We can accept any of the above options for down payment assistance, and can work with specific buyers like self-employed borrowers to look at their situation and make the best decision with them.

Contact one of our Loan Experts at (972)559-9070 and speak to them about your options.

Contact Michael

Michael DiLucchio

Michael is a Loan Expert at Sunray Mortgage. He helped over 100 Texas home buyers in the last 12 months to find the right home loan for their situation. He specializes in first time home buyers, self-employed borrowers, bank statement loans, jumbo loans, and refinance loans.