To pay the down payment for a second-hand home, prioritize saving a lump sum, seek family or friend gifts, explore private mortgage insurance (PMI) to reduce the required upfront amount, or apply for down payment assistance programs. A conventional loan typically requires 20% of the home’s value, while FHA loans require 3.5%. Consider negotiating with sellers for a price reduction or using a bridge loan if funds are temporarily unavailable.

The primary challenge for buyers is accumulating sufficient savings. According to the Federal Reserve’s 2023 Survey of Consumer Finances, only 39% of U.S. households have more than $10,000 in savings, highlighting the need for alternative strategies. Down payment assistance programs, offered by state and local governments or nonprofits, can cover up to 5% of the purchase price. For example, the National League of Cities reported that 1.2 million households accessed such programs between 2020 and 2022, with an average assistance amount of $12,000. Private mortgage insurance, which costs 0.5–1% of the loan amount annually, allows buyers to secure loans with smaller down payments, though it increases long-term costs. Combining these methods—such as saving 10%, receiving a 5% gift, and using 5% PMI—can bridge the gap to a 20% down payment. Data from the Consumer Financial Protection Bureau (CFPB) shows that 64% of first-time buyers used multiple sources to fund their down payment, underscoring the importance of flexible strategies. Ultimately, these approaches address affordability barriers while aligning with lenders’ risk requirements, ensuring smoother loan approvals and lower interest rates.