How Do I Get My Down Payment Money?

In today's market, you may have good credit, income and job stability but you don't have the down payment money. 79% of buyers that were interviews said this was the biggest obstacle in buying a house.

Where could you get the down payment?
A couple of suggestions are below:

1. Most buyers depend on the savings or the proceeds from the sale of a previous primary residence for the down payment. But, perhaps you didn't receive that much equity from your home or you didn't have one to sell.

2. Another frequently overlooked source of down payments could be the buyer's IRA. If neither of you as buyers has owned a home within two years, each may withdraw $10,000 from your own IRA to be used to buy a home. The money must be applied within 120 days from the withdrawal. The 10% penalty normally associated with early distributions is avoided but it will be subject to income tax since it was exempt the year it was deposited into the IRA.

3. Gift letter from family member! Family member must sign a gift letter that they don't expect you to pay it back. This is your "inheritance." I tell buyers that you need that "inheritance" now rather than in 20 years when your family dies and you inherit their money.

Of course full disclosure of the source of the down payment needs to be made to the lender and lenders will help you with the process of borrowing from your IRA..

Call us with questions.