For many young people, buying a house is a challenge largely because of the down payment. Many young people bring in a great income, but they haven’t worked long enough to build up a good down payment. The market right now is a buyer’s market, and there are plenty of deals out on the market. You might be able to buy a home that appraises for 5%, 10%, or even 20% higher than the purchase price. The house that we have a contract on recently appraised for $47,000 dollars higher than the purchase price! We’re getting a great deal, and you can, too. However, as my fellow readers will point out, let me make clear that I am not advocating you to buy a house when you aren’t ready. It’s a big endeavor, and you shouldn’t take the process lightly. But, if you have great income and you need extra cash for the down payment, here are some ideas to help you find “free” money for a down payment.

1. Get a Gift. Lenders will allow you to receive a gift as part or all of your down payment. This can come from a family member or a private non-profit organization such as a church or charitable organization. Remember, I don’t recommend borrowing money from a family member, but if you have a rich uncle that wants to help you out with a gift that you aren’t expected to pay back, then go for it.
2. Ask the Seller. Many lenders will accept up to a certain percentage of cash from the seller as a seller’s concession. Before you start your negotiations, think about asking for a seller’s credit to go towards the down payment. If you already nit-pick them for repair credits and closing costs, it will be tough to ask for an additional credit to go towards the down payment.
3. The FHA American Dream Grant Progarm. It’s a government sponsored grant program to help subsidize a portion of the down paymetn and closing costs for low-income and minority households. You can be awarded up to $10,000 or up to 6% of the purchase price of the home, whichever is greater. You must be a first-time home buyer and your income cannot exceed 80% of the median area income.
4. Private Organizations. The Nehemiah program is a for all homebuyers who qualify for an FHA insured loan. It will contribute up to 6% for a down payment, and there are no income or asset limits. It’s free money, you don’t have to pay it back. There are plenty of other examples, and this is one of them.

Investigate and do your research. You do have some options when it comes to your down payment, but it will take extra leg work on your part. Asking the seller for a contribution towards your down payment is the best way to get free money. Many sellers are desperate to dump their property, and they will do anything to seal the deal. Good luck, and contact me with any questions.