Sellers may also offer to help out by agreeing to accept part of the purchase price in the form of a note (I.O.U.) that you can pay off in the future. Certain Mortgage programs allow sellers to contribute toward the closing costs to help minimize your out-of-pocket expenses. You also may be able to borrow against equity in your primary residence to come up with your down payment.

Still another possibility is to secure your down payment with funds you already have in a brokerage account, according to investor and Mortgage expert Deborah A. Ten Brink, president of LLC Mortgage Network. She describes it this way: Sam wants to purchase an investment property for $100,000.00. Sam has a brokerage account with $50,000.00 in it. He must pledge 143% of the $25,000 down payment required by the lender or $35,750 (143% times $25,000.00 = $35,750.00). The funds are retained in his brokerage account, still accruing interest, but the lender puts a lien on the account to protect its interest, then Mortgages him the full $100,000.00 to buy the property. When the investment property achieves 25% equity (proven by an appraisal), the lien on the account is released and the pledged amount plus accrued interest is once again completely under the borrower’s control.

Even if you have cash for a down payment, you may not want to tie it up in your new property. So, for example, Sam can open a certificate of deposit (CD) with the lender using his down payment funds of $25,000.00, and still borrow 100% of the purchase amount of $100,000.00. When the investment property achieves 25% equity (proven by an appraisal), the lien on the CD is released and the CD, plus accrued interest, is returned to Sam.