So you're a first time homebuyer, all set to claim your part of the American Dream as well as your $8,000 tax credit by buying a home this year. You've heard that the days of "no down payment" are gone for most people, while many of the down payment assistance programs are history. Today, most banks require a down payment; the last few years have proved that when there is no (or very low) equity behind loans, everyone's in trouble when the economy falters.   

Even if you can find a lender who will let you get by without a down payment, remember the wisdom your parents passed on about why down payments are a good thing. They give you a stake in the house. Your payments are lower. You also have instant equity in case you need to borrow against your home for a good reason, like your kid's education or a medical emergency.   Assuming that you have not been saving for your first home from the age of 10, how do you come up with a down payment? If you are buying a $200,000 home, you will need from $7,000 (3.5%) to $40,000 (20%) down. This means you may need to tap all available resources. Here's a few ideas:

• Pay Yourself First - Set up an automatic savings plan - this is always a good idea, though it may be a little late to do this if you are trying to accumulate a lot of money before the Homeowner Tax Credit expires. Get a gift from your parents, grandparents, other relatives, friends, or anyone else with breath and a checkbook. Make sure to check with your tax advisor for any applicable yearly limits.
• Sell something of value, like a car, boat, motorcycle, or other asset. With your new home, you will be too busy with yard work to take road trips on that Harley to miss it the first couple years. Then maybe you can buy another one!
• Liquidate investments, such as stocks, bonds, mutual bonds.
• Take a loan or withdrawal from your 401K - but keep in mind that there may be interest, taxes, or penalties depending on how the money comes to you. Talk to your accountant on this one.
• Allocate any large sums of money like your tax refund or bonuses to the down payment funds.
• Collect on any money owed to you.
• Check around for down payment assistance programs that you might qualify for - such as through your state or local government, your builder (for new construction), or your employment if you are a public servant like a teacher, fire fighter, or police offer
• Seek out a private down payment assistance program.

Since it is always wise to keep plenty of money on hand to ease your transition into your new home, as noted in our last post Watch Out for Unexpected Costs in Your Affordable Home, be flexible in the type of loan you apply for. In most cases, an FHA loan, with its 3.5% minimum down payment is a great loan product for first time buyers. Once you are in the home, you can always pay down the mortgage if you want the benefit of more equity without having to make yourself cash poor upfront.   For plenty of help, both in finding a great Denver home and finding the best way to get your home financed in the Denver area, check out the Bandy Home Team. We will show how the new $8,000 tax credit will work for you too.   Marianne Bandy Denver Relocation Experts