Save
Look for ways to reduce your monthly expenditures to save toward a down-payment. You could enroll for an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. Most people save a couple of years for their down payment.

Move
You may be able to save additional funds if you can move into less expensive housing.

Reduce other higher interest rate debt
Paying off credit cards will initially reduce your savings, but the money you will save from higher interest rates will pay-off in the long run.

Sell some investments

Get a second job and save your earnings

Skip a year's vacation

Gift from Family
Parents and other family members are often anxious to help children buy their first home and may have the means to give you a gift of money for a portion or all of your down payment.

• "Carry Back" Mortgage
  In the case of the seller "carrying back a second mortgage", the seller loans you part of his or her equity. In this scenario, you would finance the majority of the loan with a traditional mortgage lender and finance the remaining amount with the seller. Typically you will pay a slightly higher interest rate on the loan financed by the seller.
  
  

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Documenting Your Down Payment

Documenting that the down payment comes from your savings and that you will have savings and/or assets over and above the down payment gives the lender confidence in your strength as a borrower and your ability to repay the loan.

Take extra care to document the sources for any monies to be used for the down payment or closing costs.

Acceptable Down Payment & Closing Costs Sources

• Cash in a bank account
• Mutual funds / stocks / IRA / 401K
• Proceeds from the sale of another property
• Gift from an immediate relative
   

Click here to learn more about verifying your down payment, closing costs, income and debt.