The sources you can use right now

Down payment money comes from your own savings, gifts from family members, employer programs, government-backed loans, or a combination of these. The source matters because it changes what paperwork you need, how much you can borrow, and whether the lender will accept it at all.

Most people use savings they have already accumulated. If you do not have savings yet, the fastest route is usually a gift from a parent, grandparent, or other family member—lenders allow this without requiring you to repay it. If neither savings nor gifts are available, some employers offer down payment information as part of their benefits package, and some states and cities run programs that provide forgivable loans or grants for first-time buyers.

The lender you choose will set rules about which sources they accept. A conventional loan (not backed by the government) typically requires a larger down payment and is stricter about where the money comes from. An FHA loan, backed by the Federal Housing Administration, allows smaller down payments and is more flexible about gifts and information programs.

Key Takeaways

  • Your own savings is the simplest source because it requires no paperwork beyond a bank statement showing the money has been in your account for at least two months.
  • Family gifts do not have to be repaid and lenders allow them, but you will need a signed gift letter from the person giving the money stating it is a gift, not a loan.
  • Employer down payment information programs vary widely—some give you cash, some give you a loan at low interest, and some match a percentage of what you save.
  • Government programs exist in most states and many cities, but they have income limits and are often only open to first-time buyers, and some run out of funds partway through the year.
  • The lender you choose determines which sources they will accept, so comparing lenders matters as much as finding the money itself.

Using your own savings

Savings is the cleanest source because lenders ask the fewest questions. You will need to show bank statements covering the last two months to prove the money is actually yours and has been sitting in the account long enough that it could not have been borrowed yesterday.

If you have been saving in multiple accounts—a checking account, a savings account, a money market account—lenders will want statements from all of them. The two-month rule applies to each account separately. If you moved money between your own accounts in the last two months, you may need to show the transfer records to prove it came from you, not from someone else.

Some lenders will also ask where the money came from originally. If you received a large deposit in the last few months—a bonus, a tax refund, an inheritance—be ready to explain it. This is not a disqualification; lenders just want to confirm you did not borrow it.

Accepting a gift from family

A gift from a parent, grandparent, sibling, or other relative does not have to be repaid and lenders allow it. The person giving the gift does not need to be a co-borrower on the mortgage, and they do not have any claim to the house.

What you do need is a gift letter—a signed statement from the person giving the money that says the amount, that it is a gift and not a loan, and that they do not expect repayment. The letter should include the giver's name, address, phone number, and relationship to you. Some lenders have a template they want you to use; ask before the giver signs anything.

After the gift letter is signed, the money must be transferred to your account. The lender will ask to see a bank statement showing the deposit. Like savings, the money should sit in your account for at least two months before closing, though some lenders allow less time if you have the gift letter and can show the transfer clearly.

Lenders do not allow gifts from people you are not related to or do not have a documented relationship with. A friend or coworker cannot give you down payment money, even with a gift letter. The rule exists because lenders want to confirm the money is truly a gift and not a hidden loan you will have to repay.

Employer down payment information programs

Some employers offer down payment help as part of their benefits. The structure varies: some companies give you cash, some offer a loan at a below-market interest rate, some match a percentage of what you save, and some pay a flat amount like $5,000 or $10,000.

To learn about your employer offers this, check your employee handbook or ask your human resources department directly. If your company has a benefits portal, down payment information may be listed there alongside health insurance and retirement plans.

If your employer offers a loan rather than a gift, the lender will want to know about it. You may have to count it as a debt you owe, which affects how much you can borrow for the mortgage. Ask your HR department whether the down payment loan will show up on your credit report or be reported to lenders—some employer programs do not report to credit bureaus, which means they will not count against you.

If you are changing jobs, check whether the information is available when ready or only after you have worked there for a certain length of time. Some programs require you to stay with the company for a set period after receiving the money, or you have to repay it.

State and local down payment information programs

Most states and many cities run programs that provide down payment money to people buying a home for the first time. These programs are usually run by a state housing finance agency or a local housing authority. The money typically comes as a forgivable loan—you do not make monthly payments, and after you own the home for a set number of years (often 5 to 10), the loan is forgiven and you owe nothing.

Income limits explore to most programs. You will need to show recent tax returns and pay stubs to prove your household income is below the limit. The limit varies by state and sometimes by county within a state, and it is usually tied to the area's median income—in an expensive city it will be higher than in a rural area.

To find programs in your state, start with your state housing finance agency. You can search online for "[your state] down payment information" or contact your state's housing department directly. Many states also have a 211 service—dial 211 or visit 211.org—which can tell you what programs exist in your area and whether they are currently open.

These programs often have limited funding and close when the money runs out. Some reopen the next fiscal year; others stay closed. Calling to ask whether a program is currently open takes five minutes and saves you from filling out an process for a program that is not accepting new people.

Down payment loans and second mortgages

A down payment loan is a separate loan you take out specifically to cover the down payment. It is not the same as the mortgage itself—it is an additional debt. The lender will count it as a monthly obligation when deciding how much you can borrow for the main mortgage, which usually means you can borrow less overall.

A second mortgage or piggyback loan works similarly: you borrow against the house itself to cover the down payment. This was more common before 2008 but still exists. Like a down payment loan, it counts as debt and reduces your borrowing power for the primary mortgage.

Both options are more expensive than using savings or gifts because you are paying interest on the down payment money itself. Compare the total cost—the interest on the down payment loan plus the interest on the larger primary mortgage—against the cost of waiting to save more before buying. Sometimes waiting is cheaper.

What lenders will and will not accept

Conventional loans (not backed by the government) are the strictest about down payment sources. They usually require the money to come from your own savings, a family gift with a gift letter, or an employer program. Some conventional lenders will accept down payment information from a government program, but not all.

FHA loans are more flexible. They allow gifts, employer information, and government programs. They also allow the seller to contribute toward your closing costs, which can free up your own money for the down payment itself.

VA loans (for military members and veterans) and USDA loans (for rural properties) have their own rules about acceptable sources. Ask the lender upfront what they will accept rather than spending time gathering documents they will not use.

No lender will accept money you have borrowed from a credit card, personal loan, or line of credit. They will not accept a loan from a friend. They will not accept money from a payday lender. These are all considered borrowed money, and lenders want to know you can actually afford the down payment without taking on additional debt.

Frequently Asked Questions

Can I use a credit card to pay for the down payment?

No. Lenders will see the credit card debt on your credit report and will not allow it. They want to confirm the down payment comes from money you actually have, not money you are borrowing at high interest rates. If you put the down payment on a credit card and then pay it off with a loan, lenders will still see the transaction and reject it.

What if I do not have two months of bank statements?

If you recently opened the account or moved money into it, tell the lender. You may be able to provide statements from your previous bank showing the money was yours, or provide a letter from your employer confirming a bonus or paycheck deposit. Lenders have some flexibility here, but you need to explain the situation before you explore.

Can my spouse's savings count toward the down payment if we are not married yet?

Not unless you are both on the mortgage. If only you are borrowing, only your assets and income count. If you both want to be on the mortgage, you can combine your savings and income. Talk to the lender about what makes sense for your situation.

Do I have to tell the lender where the down payment came from?

Yes. The lender will ask for documentation—bank statements, gift letters, or proof of information—as part of the mortgage process. This is standard and required by federal law. Lenders need to verify the money is real and that you are not taking on hidden debt.

What happens if I get a gift after I have already applied for the mortgage?

Tell the lender when ready. They will want an updated gift letter and a bank statement showing the deposit. Do not deposit the money and then try to hide it; lenders will see the new deposit when they pull your final bank statements before closing, and unexplained deposits can delay or kill the deal.