Can I borrow money for my down payment?

You have options, which include taking out a home equity loan or home equity line of credit (HELOC), or even asking a friend or relative for a private loan. Below, you’ll learn the pros and cons of the various ways you can borrow money for your down payment, so you make the right decision for your financial needs.

How do I get a down payment loan?

Asking a friend or family member for a down payment loan is another option. Lenders will only accept a private mortgage secured by an asset, which means you’ll need to put up your home, car or another valuable — like artwork — as collateral for the loan. Plan to document the following if you choose this borrowing path:

How can I borrow from the bank of Mom and Dad?

A final option is to borrow from the Bank of Mom and Dad using an interest only promissory note secured by a Deed of Trust. Mom and Dad can loan Jill the entire $600,000 with an interest only loan at 3%, or $18,000/year. Mom and Dad can forgive the interest each year (see above).