What can I use for a down payment?

Down payment funds can come from a variety of sources.  The thing to keep in mind is that you can use your assets, or assistance/gifts from sources which do not need to be repaid.*

  • You can use liquid assets like a checking or savings account.
  • You are allowed to pull money out of a retirement account like an IRA or a 401k.  You can pull this money out either in the form of a loan against your own assets, or as a withdrawal for a home purchase.  Specifically with regard to a Roth IRA housing down payment, you are allowed to withdraw $10,000 with no penalty as long as you’ve invested $10,000 into the account.
  • You are allowed to use governmental assistance.
  • A family member may provide you with a gift that does not need to be repaid.  You cannot receive a down payment gift from a friend or anyone involved in the purchase transaction.  This is because if your friend gives you money for a down payment, the mortgage underwriters of the world would not believe that that is a gift rather than a loan that has to be repaid.
  • Your employer may assist with a down payment
  • If you’re getting married, you can setup a wedding down payment fund with gifts from your guests.  This one is a little more complicated.


*You are allowed to use government assistance funds which do need to be repaid as part of your down payment.