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Sources of Cash for a Down Payment

You may find that your own cash reserves are not enough to cover your down payment. Here are a few options:

  • Receive a tax-free gift from your parents (or others) documented by a "gift letter" stating no repayment is required. The gift letter shows that you are not incurring additional debt, which may preclude you from getting Kentucky mortgage approval for the amount, you desire. Some lenders may require you to use some of your own money in addition to the gift. The money will have to be verifiable.
  • Borrow against a life insurance policy
  • Borrow against a company pension plan
  • Cash in a retirement savings plan. Keep in mind; you may have to pay a penalty for early withdrawal.
  • Sell something! You may have some items of value that you don't want or use anymore that someone may be willing to purchase from you. Make sure and check with your lender about documentation they will need regarding the sale.
  • Grant Monies
  • Tax Refund

You are not alone! Many people find themselves in a "cash poor" position. Don't let that automatically stop you from buying a home. If you have a good income and credit history, you may be better off than you think as many programs do not require a down payment.


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