How to Raise Money for a Down Payment

If you don’t have $10,000 for a down payment, there are a variety of ways you can raise the money and--using the methods in the accompanying story--move into your new house by the end of the year.

* Ask your parents for help. Your folks or other relatives might be willing to give you some or all of the cash for a down payment, or could loan it to you at a favorable interest rate.

* See what your employer has to offer. A growing number of companies now offer special programs for employees who want to buy a house. Some offer cash grants, while others offer to kick in, say, $1 for every buck that you put up.

* Sell something you already own. Jewelry, furs, antiques or even a second car can be sold to raise cash. So can stocks and bonds.

* Check out your insurance policy. Life-insurance policies and annuities can often be cashed in to raise a down payment. Or, you might be able to borrow against their built-up value at an unusually low rate.

* Consider your retirement fund. Individual retirement accounts, 401(k) plans or company profit-sharing plans can be tapped for a down payment, although you might suffer a nasty tax bite. Some companies allow workers to borrow against their plans at a low rate, which is far better than paying taxes and penalties on an outright withdrawal.

* Refinance your car. If you have a car or boat that’s already paid off, you can use it as collateral to get a bank loan and then use the proceeds for a down payment on a house.

* Raise your withholding allowances. Asking your employer to increase the number of allowances you claim will raise your take-home pay. Put the extra money in the bank, and you could have several thousand dollars for a down payment saved up in a matter of months.

* Take out a bill-consolidation loan. Many lenders offer special rates on these loans, which you use to pay off your outstanding accounts. Your overall monthly debt burden will drop because the loan rate will probably be lower than the rate that you’re paying on your credit cards, and also because you’ll be stringing your debt payments out over several years. Put your savings into a special account to “grow” a down payment.

* Get a second job. It might not be much fun, but you can always quit after you have saved up enough for a down payment. Having a second source of income will also make it easier to qualify for a mortgage.