Basic Financial Planning for Newlyweds




Articles of 

Message Board

CPAs, Lawyers & Advisors






Some Creative Ways to Come Up With a Down Payment For a Home


Your Initial Financial Plan:

Have You Read...

10 Steps to Home Owneship:  A Workbook for First-Time Buyers

Following the hugely successful 100 Questions Every First-Time Home Buyer Should Ask, this essential workbook takes virgin buyers through the essential choices that precede buying a house. Deciding on renting versus owning, figuring the affordable range of purchase prices, planning for down payment and closing costs, fixing credit problems, choosing mortgages, and much more make this the complete guide to buying a first home   

To order this book from Barnes&, click on 10 Steps to Home Ownership


Looking For a CPA, Lawyer or Financial Advisor who has worked with lots of other newlyweds and is familiar with the issues that affect you?  

When the time comes for you to purchase your first home, finding a great house or condo is the easy part.  For many first-time homebuyers, coming up with money for the down payment and closing costs poses much more of a challenge.  If your savings account isn't exactly bursting at the seams, you might still be able to scrape together enough money to purchase a home if you know where to look.

How Much Do You Need?

If you're short on funds, the first step is to determine the minimum amount of money you need in order to purchase a home.  Talk to some banks, mortgage brokers, and your credit union to find out what kind of low down payment mortgage programs are available.  Ask your friends and colleagues if they did anything creative when they bought their homes.  And while you're surfing the web, see what interesting ideas and suggestions you can find.  Once you determine how much you need, the next step is to determine where the money will come from.

Borrow Against Your 401(k) Account

If you've been contributing to a 401(k) plan at work, give the benefits department a call to see if you're allowed to take a loan from your account.  Most plans allow you to borrow up to 50% of your account balance for the purchase of a home.  What's the catch?  If you quit or get fired before you pay back the loan, the outstanding balance will be treated as a taxable distribution and will probably be subject to a 10% early withdrawal penalty as well.

Don't Overlook Your IRAs

Another source for the down payment is your Individual Retirement Account (IRA).  While borrowing against an IRA is prohibited, you are allowed to withdraw up to $10,000 for "first-time" homebuyer expenses without being hit with the 10% early withdrawal penalty.  Keep in mind, however, that you'll owe income taxes on the amount withdrawn and will be dipping into money that is earmarked for your retirement.

Roth IRAs provide some opportunities as well.  Contributions made to a Roth can always be withdrawn at a later date.  Plus, up to $10,000 of the accumulated earnings can be withdrawn by first-time homebuyers, subject to certain restrictions.  Even though both of these withdrawals are tax-free and penalty-free, you should only take money out of this tax-free investment opportunity as a last resort.

Family Assistance

Many first time homebuyers turn to family members for assistance with their down payment.  If you're fortunate enough to be getting some help from your family, try to deposit that money into your savings account at least three months before you apply for the mortgage. Otherwise, the loan underwriter will ask why a lump sum of money suddenly appeared in your account and will request that you provide a gift letter signed by the donor.

It Can Be Done

Plan ahead.  Very few first-time homebuyers these days have enough money in their savings accounts to cover a 20% down payment on a new home.


  Buy or Sell your home with zipRealty, and save $$$

Commission Free Real Estate




E-mail us at

copyright 2001-2002

This article was written by Andrew D. Schwartz, CPA for and had previously been posted on