Making a Down Payment When You Have Little Cash Available
In most cases, you will need to make a down payment prior to closing on a home purchase. The down payment can range from 3.5 percent to 20 percent depending on the type of loan product that you are using. In some cases, you must have the cash on hand prior to obtaining loan approval from a lender. However, it can also be possible to get money from other sources.
Take Money From a Retirement Account
You are generally allowed to take money from a 401(k) or an IRA to make a down payment on a primary residence. In most cases, the money that you take from a retirement account to fund the down payment will not be subject to an early withdrawal penalty. It may also be possible to avoid paying income taxes if the money is used to help pay for a home.
Have Someone Gift You the Funds
Most government-backed loans will allow you to accept gifts from others to help make your down payment. The source of the funds must be documented using a gift letter. However, almost any person or entity can give you the money if they recognize that is it not a loan and that you have no obligation to repay it.
Lenders May Offer Closing Cost Credits
Working with the best Las Vegas mortgage brokers can make it possible to learn more about lender credits and other financial assistance programs. These programs may provide money for a down payment in exchange for taking a class or promising to live in a home for a predetermined period of time.