5 Ways To Save For A Down Payment Thinking Outside The Box

Dated: 05/22/2017

Views: 88


Image: Jacob Thomas/Offset

Buying your first home conjures up all kinds of warm and fuzzy emotions: pride, joy, contentment. But before you get to the good stuff, you’ve got to cobble together a down payment, a daunting sum if you follow the textbook advice to squirrel away 20% of a home’s cost.

Here are five creative ways to build your down-payment nest egg faster than you may have ever imagined.

1. Crowdsource Your Dream Home

You may have heard of people using sites like Kickstarter to fund creative projects like short films and concert tours. Well, who says you can’t crowdsource your first home? Forget the traditional registry, the fine china, and the 16-speed blender. Use sites like Feather the Nest and Hatch My House to raise your down payment. Hatch My House says it’s helped Americans raise more than $2 million for down payments.


2. Ask the Seller to Help (Really!)

When sellers want to a get a deal done quickly, they might be willing to assist buyers with the closing costs. Fewer closing costs = more money you can apply toward your deposit. Granted in our current market here in Denver, this won't always work. 

These are known as "seller concessions" and there are multiple ways to write this up in a contract. 

There are limits on concessions depending on the type of mortgage you get. For FHA mortgages, the cap is 6% of the sale price. For Fannie Mae-guaranteed loans, the caps vary between 3% and 9%, depending on the ratio between how much you put down and the amount you finance. Individual banks have varying caps on concessions.

3. Look into Government Options

The U.S. Department of Housing and Urban Development, or HUD, offers a number of homeownership programs, including assistance with down payment and closing costs. These are typically available for people who meet particular income or location requirements. HUD has a list of links by state that direct you to the appropriate page for information about your state.

HUD offers help based on profession as well. If you’re a law enforcement officer, firefighter, teacher, or EMT, you may be eligible under its Good Neighbor Next Door Sales Program for a 50% discount on a house’s HUD-appraised value in “revitalization areas.” Those areas are designated by Congress for  homeownership opportunities. And if you qualify for an FHA-insured mortgage under this program, the down payment is only $100; you can even finance the closing costs.

For veterans, the VA will guarantee part of a home loan through commercial lenders. Often, there’s no down payment or private mortgage insurance required, and the program helps borrowers secure a competitive interest rate. If you are a veteran, these are the BEST loans available! 

4. Check with Your Employer

Employer Assisted Housing (EAH) programs help connect low- to moderate-income workers with down payment assistance through their employer. In Pennsylvania, if you work for a participating EAH employer, you can apply for a loan of up to $8,000 for down payment and closing cost assistance. The loan is interest-free and borrowers have 10 years to pay it back.

Washington University in St. Louis offers forgivable loans to qualified employees who want to purchase housing in specific city neighborhoods. University employees receive the lesser of 5% of the purchase price or $6,000 toward down payment or closing costs.

Ask the human resources or benefits personnel at your employer if the company is part of an EAH program. I haven't heard of many of these in Denver but it doesn't hurt to ask. If someone does find something please email me directly or comment below! I would love to learn about companies that do offer something of this sort. 

5. Take Advantage of Special Lender Programs

Finally, many lenders offer programs to help people buy a home with a small down payment. The biggest misconception about downpayment is everyone thinks they need at least 20% down when in fact many loan programs require only 3.5% to as low as 1%.

For example, FHA loans can require as little as 3.5% but you must keep in mind that you will have upfront costs as well as mortgage premiums and depending on what you are looking at, it can add up to $300 on your monthly mortgage. 

Not so daunting after all, is it? There’s actually a lot of help available to many first-time buyers who want to achieve their homeownership dreams. All you need to do is a little research — and start peeking at those home listings!



Life is a 24 hour business, getting married or divorced, having kids or adopting,

downsizing or upgrading, starting a new career or retiring, and moving to a different

state or country. There’s a home for every stage in your life. Let me help make your life easier.

Denver CO Homes for Sale – Wan Lim, Associate Broker/ Realtor

Your local realtor serving Cherry Creek, Centennial, Denver and the

surrounding communities. Purchasing a home is not easy, but it can be

with me! I will work tirelessly with investors, buyers and sellers to 

save you time and money but most importantly to get you into the 

home of your dreams! Call Wan Lim anytime at (303) 910-0818

You can also text 'Wan' to 85377 for my mobile business card!

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Wan Lim

My name is Wan, I am passionate and driven to help everyone I can in buying and selling real estate. Just a little bit about me, I graduated Colorado State University with a degree in Hospitality Mana....

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