In 2025, first-time homebuyers are using creative strategies to afford homes — even without large savings. From assistance programs to seller negotiations, these six strategies can help you break into homeownership without needing perfect credit or a six-figure salary.
Whether you’re renting or living paycheck to paycheck, here’s how real buyers are making it work — and how you can too.
Tap Into Down Payment Assistance Programs
Down Payment Assistance (DPA) programs can offer grants, forgivable loans, or deferred second mortgages to help cover your down payment or closing costs. These programs are especially friendly to first-time buyers and often come with:
- Income limits based on your area
- Minimum credit scores (usually 620–640+)
- Homebuyer education requirements
Some programs offer $10,000 or more in assistance, and we help you find local and national options tailored to your income and location.
Pro Tip: Many DPA programs are forgivable if you stay in the home for a set number of years.
Use Gift Funds from Family or Friends
Gifted funds from relatives (and in some cases, friends or employers) can legally be used toward your down payment. You’ll just need:
- A signed gift letter confirming the funds don’t need to be repaid
- Documentation of the transfer into your account
FHA, VA, and conventional loans all allow gift funds — and at Federal Hill Mortgage, we’ll walk you through how to document gift funds correctly so you don’t hit snags during underwriting.
Borrow from Your 401(k) Without Penalties
Your 401(k) can be a powerful tool when used strategically. Many plans allow you to borrow up to $50,000 or 50% of your vested balance, whichever is less.
Why buyers choose this route:
- No credit check required
- You’re paying yourself back over time
- Funds are available quickly
Be cautious though — early withdrawals (vs. loans) could trigger taxes and penalties. We’ll help you understand how your 401(k) affects your mortgage approval and recommend the right approach for your goals.
Sell Personal Assets to Raise Funds
Have a car, jewelry, or collectibles with value? Selling personal items can be a smart way to boost your down payment fund. Just be prepared to:
- Provide a bill of sale
- Show bank deposit records
- Prove prior ownership of the asset
Lenders need a clear trail of where the money came from. We’ll help you get everything in order so you can use the proceeds toward your mortgage.
Boost Your Savings with a Side Hustle
A second income stream — even part-time — can help you save faster. Whether you’re freelancing, driving for Uber, or selling online:
- Deposit your earnings into your bank account (no cash under the mattress)
- Keep receipts or transaction records
- Avoid large, unexplained deposits
While not always counted as qualifying income, side hustles are still a great way to build your down payment fund faster.
Use Seller Concessions to Lower Upfront Costs
In today’s market, sellers are often willing to negotiate. A smart offer can ask the seller to cover:
- Part or all of your closing costs
- A temporary rate buydown
- Other upfront fees that reduce your out-of-pocket cash
We help you structure seller concessions the right way so you get the most out of your offer without jeopardizing the deal.
You Can Afford a Home — With the Right Strategy
Buying your first home isn’t about hitting some magical savings number. It’s about choosing the right mix of tools and tactics to make it work for your situation.
Whether it’s down payment assistance, gift funds, a 401(k) loan, or seller help — we help you find your path.
What Makes Federal Hill Mortgage Different?
- No hard credit check required to explore your options
- Local + national DPA program expertise
- Personalized loan strategies built around your real-life situation
- Flexible solutions other lenders don’t always offer
Quick Recap: 6 Down Payment Ideas for First-Time Buyers
strategy | key benefit |
|---|---|
DPA Programs | Grants or forgivable loans to cover down payment |
Gift Funds | Family, friends, or employer support (with documentation) |
401(k) Loans | Borrow from yourself, often with no credit impact |
Sell Assets | Use big-ticket items to raise cash (paper trail required) |
Side Hustles | Boost savings fast while building good income habits |
Seller Concessions | Ask seller to cover costs and free up your savings |
Need help picking the right strategy?
Ready to Find Your Path to Homeownership?
Let’s build a strategy that works for you. Even if you think you’re not ready, you may be closer than you think.
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