4 Ways to Get Money for the Downpayment

Coming up with a downpayment for a home purchase can be difficult at times. However, there are numerous ways that you could potentially get the money that you need for a downpayment.

1. Equity

If you are an existing homeowner, one of the best ways to get the money for the down payment is through the equity in your home. When you sell your house, you will most likely have some equity left over. This will allow you to use that money to make a downpayment on your new home. 

2. 401k

If you have a 401k, you may be able to borrow against it for your downpayment. Most 401k plans allow for hardship withdrawals that will not cause you to have to pay an early distribution penalty. In most cases, using the money for the downpayment on a home will qualify.

3. Second Mortgage

In some cases, you may be able to get a second mortgage from the seller of the home. By using seller financing, you could borrow the money that you need without it showing up on your credit report.

4. Stocks

If you own significant amounts of stock, you could potentially secure a separate loan using stock as the collateral. 

Can you use a credit card for a down payment on a home?

If you are trying to come up with a down payment for a home purchase, you may be trying to look at all of the options that are available to you. Technically, you could get a cash advance from your credit card up to a certain amount of money. You could then use the cash for your down payment. While this is possible, it is most likely not a good idea. The interest on credit card cash advances is even higher than regular credit card interest. This can add up quickly when you are borrowing enough money for a down payment on a house. 

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