What Funds Can You Use for a Down Payment?

January 7, 2025 – St. Louis, MO

• You’ve found the home you love ✅
• Your offer has been accepted, and you’re officially under contract ✅
• Your Gershman Mortgage loan officer has helped you select the perfect loan to fit your needs ✅

It’s almost time to sit down at the closing table and hand over the down payment! But do you know what funds you’re allowed to use for your down payment? This will likely be one of the largest checks you’ll ever have the pleasure of forking over. It’s important you know all of your options on where these funds come from.

1. Personal Savings or Checking: The buyer’s personal savings or checking account is the most common source of down payment funds. If you’re considering going this route, talk to your loan officer about whether a cashier’s check or a wire transfer will be required.
2. Proceeds From a Home Sale: Buyers who are selling their current home and buying a new home will often use the proceeds from their current home to put towards their down payment on their new home.
3. Gift Funds: A relative or friend may gift the buyer money to use for their down payment. A Gift Letter will be needed from the friend or relative to ensure the lender that this is not a loan and that the funds will not need to be repaid at any point.
4. Retirement Accounts: Some buyers opt to pull funds from their retirement account(s) to help with their down payment. If this is an option you’re considering, make sure to chat with your retirement financial institution about any penalties or fees that may be charged.
5. Down Payment Assistance Programs: The government offers Down Payment Assistance programs at different levels for home buyers. Have a conversation with your loan officer regarding these options to see if you are eligible for any of these programs.
6. Investment Funds: If you have funds saved in stocks or mutual funds, these can be an excellent source for your down payment. Similar to retirement funds, it’s important to know what penalties or fees could be associated with pulling funds from these accounts as well.

Seeing the amount required for your down payment can be a tough pill to swallow, but talking to your Gershman loan officer about all of the available options can help. Have a plan set ahead of time and know what will be required so there are no hiccups at the end of the process!

About Gershman: Communities, families, and homes are at the heart of what we do at Gershman Mortgage. Our founding principles are based on the core values of honesty, integrity, the entrepreneurial spirit, and putting our customers first. We are passionate and committed to customer service and strive to ensure that we exceed the expectations of our customers. We are a customer-centric company devoted to creating and maintaining long-lasting relationships.

NMLS #138063 16253 Swingley Ridge Road Suite 200 Chesterfield, MO 63017 (800) 457-2357 Equal Housing Lender. Serving borrowers in: Alabama, Arkansas, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Wisconsin

Written by Alli Wideman 01/07/2025 for Gershman Mortgage