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Downpayment Options

There are a variety of sources that home buyers may draw on for their down payment:

• Personal Savings (including IRA's & 401(K)'s)
• Proceeds from the sale of an asset (i.e stocks, bonds, real estate)
• Gift funds from a relative -the lender may require a 20% down payment if the source of the down payment is exclusively gift funds and the borrower does not have at least 5% from their personal funds to contribute.
• Zero down payment or 100% financing - either a 1st mortgage exclusively or a combination of a 1st and 2nd mortgage (sometimes referred to as a piggyback mortgage). Many lenders are shying away from these types of loans, but you have a solid work & credit history, you may find a loan program(s).
• Low down payment loans without mortgage insurance - what the industry refers to as an 80-10-10 (an 80% 1st mortgage, 10% 2nd mortgage & a 10% borrower down payment). Also available is an 80-15-5 (requiring an 80% 1st mortgage, 15% 2nd mortgage & a 5% borrower down payment).
• Borrow your down payment utilizing assets that you already own. For example borrow against your 401(K) - if your company plan allows it or borrow against your fully invested stock portfolio (avoiding a taxable sale and keeping your portfolio fully invested). You may also obtain a bridge loan against your yet unsold primary residence in order to purchase a new one.