How to Make a Down Payment on a House Without Your Finances Crashing

Buying a home is an exciting time, whether it’s your first home or just the latest in a line of homes over the years. Sometimes, however, you find the perfect home when you’re not quite expecting it. When this happens, you might find yourself without the money you need to make the down payment required. You may be short just a few thousand, or you may be in need of the entire amount. Whichever the case, there are several options you can utilize in order to come up with the money needed to make your dream home yours.

A Payday Loan Can Make up the Shortfall

If you’re only short by $1,000 or a little more, and you’d be able to pay the money back soon, payday loans without checks are the quickest and easiest way to make up the shortfall. As long as you have a checking account, and meet a few other simple qualifications, you can apply by phone and be approved in a matter of minutes—sometimes even just one minute.

Perhaps one of the best parts of this option is that there’s no credit check, which means you can use this option without worrying about it impacting your credit and possibly affecting your ability to get a mortgage on the house you’ve found.

Borrow from Your IRA

If you’re buying your first home and borrowing from a retirement account, a Roth IRA is your best option from which to withdraw money. You can withdraw your contributions at any time without penalty or tax, and once you’ve had the account for at least five years, you can withdraw the contributions plus an additional $10,000 without penalty or tax for the purchase, repair or remodel of a first home. It is important to know, however, that once you make this withdrawal, you have 120 days to use the funds. After 120 days, you may be required to pay the penalty.

After a Roth IRA, a traditional IRA is your next best bet. This also allows you to withdraw up to $10,000 for the purchase, repair or remodel of a first home penalty-free, but you will have to pay regular income tax on the money. Additionally, you’re still required to use the funds within 120 days of the withdrawal or you’ll need to pay the 10% penalty.

Another option is that you can withdraw up to $10,000 without penalty for the purchase of a home for your spouse, children, grandchildren or parents.

Another key point to keep in mind is that each spouse can withdraw up to $10,000 from their own IRA. This means that between you and your spouse if you both have accounts, you can get up to $20,000.

Get a Piggyback Loan

A piggyback loan is a loan taken out at the same time as a mortgage to make up the down payment. This can be a second loan that makes up the difference between the money you have and the money required for a 20% down payment, or it can be the entirety of the 20% down payment. It’s important to compare the costs of taking out a piggyback loan compared with the costs of a larger first mortgage and private mortgage insurance to make sure you make the best financial deal.

Borrow from Friends or Relatives

Friends or family may sometimes be willing to help you come up with a few thousand extra dollars to enable you to make your down payment. This can be a good option as they often loan you the money interest-free, and will let you pay the money back on your own time, without late fees or other worries. However, borrowing from people that you are close to can create tension later if you do have difficulty paying the loan back.

Buying a home gives many people a sense of stability and makes them feel safe and secure. Ruining your finances to do it will ruin that sense of stability. Handled correctly, you can find the money you need without building on a shaky foundation.

About the Author:

Kara Masterson is a freelance writer from West Jordan, Utah. She graduated from the University of Utah and enjoys writing and spending time with her dog, Max.

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