5 Resources That’ll Help You Scrape Together a Down Payment Faster

Millennials lament that our high school curriculum required impossible calculus courses or obscure history classes, but never “Taxes 101,” “Intro to Mortgages,” or “This Is How Bitcoin Works.” (Alright, I admit, Ididtake Consumer Education—which I cheated my way through so I could dedicate more time to, *checks notes*, learning the dance moves to “Crank That (Soulja Boy)” and pursuing football players whose interest in me was nonexistent.)

Now that I’m 30 and growing tired of the rental game, I’ve wondered if perhaps, despite literally everything I’ve ever read about how millennials will never afford homes (a falsehood, by the way), I can find a way to make a down payment. Fortunately, I’ve learned that there are plenty of down payment assistance resources available for first-time homebuyers. Here are some ways to make buying your home easier and totally possible.

There are countless grant programs out there, says Elise Jordan, a Chicago-based loan originator. “I often tell my clients that they are a lot like college scholarships. They are available for just about anything but you need to know where to look,” she says.

Among the notable grant programs are Chenoa,state-funded programs, and Good Neighbor Next Door. Chenoa, Jordan explains, was originally created to assist Native Americans and other minorities with purchasing homes. It has since expanded to provide assistance to any qualifying borrower who may need assistance. And through HUD, Good Neighbor Next Door offers qualifying public servants, like teachers, law enforcement officers, and firefighters, assistance. “While this program doesn’t provide down payment assistance per se, it does offer qualifying borrowers 50 percent off of the list price of the home,” Jordan says.

Whereas lenders typically require a 20 percent down payment for a home, federal loans may reduce that percentage to figures like 3.5 percent. US veterans, meanwhile, may be eligible for a VA loan, which allows for a 9 percent down payment. Those who have served can speak with their lender to be sure they meet qualifications.

There are alsoFHA, or Federal Housing Administration, loans. “FHA loans are great options because they offer financing to those who may not otherwise qualify. The minimum credit score for an FHA loan is 500, and the maximum debt-to-income ratio is 57 percent, which means that even if your financial situation isn’t perfect, you may still qualify to purchase a home,” Jordan says. “Plus, the down payment is a flat 3.5 percent of the purchase price for single-family homes all the way up to 4-unit properties.”

If this is your first time purchasing a home, you may qualify to borrow from your retirement account. Some taxes or penalties may apply (especially if you’re nowhere near retirement age), so you’ll want to tread carefully. For a Roth IRA, you could borrow up to $10,000 without penalty to fund your down payment. Other IRAs have similar rules, though they may require that you pay income taxes on what you’ve borrowed. When you consider the boost $10,000 could give you (and if you’re moving in with a partner who also dips into their retirement fund for a total of $20,000) that puts a big dent in the down payment. You’re also able to take a loan from your 401K, though there are limits to the amount and you must pay back your loan with interest. Talk to a mortgage broker and consider the impact of taking on bigger loans from yourself, which will incur debt and may impact your mortgage loan interest rate.

Among your workplace’s many helpful orquirky benefitsmay be down payment assistance (DPA) options. For down payments or even assistance with closing costs, these housing incentives are a sweet deal not all employees realize even exist. Whether the employer offers a loan that you pay back, or a grant, it’s worth setting up a meeting with HR to examine your options. Naturally, the qualifications vary by employer, so be sure to ask about this in your benefits conversation (and consider inquiring about this benefit during job interviews).

The thing that’s really useful in minimizing the amount of money you need to bring to the table is seller credits, according to Jordan. “While the buyer will still need to show that theycouldbring the required down payment to closing… it is possible to have a majority of your costs covered by the seller.” Just having proof of funds in your bank account or a retirement savings could go a long way, and maybe even all the way. “Teamed with down payment assistance, you can actually bring $0 to the table in some cases,” Jordan says. With a seller credit, the buyer can roll those formerly up-front closing costs into their total loan amount.