Savings: We’ll start with the easiest first.  If you have money saved in the bank, most people will use part or all of this money for a down payment.  Depleting your savings for real estate will more than likely pay off in the long run as the home appreciates whereas depleting your savings on a new car will have the opposite effect.  As such, don’t be afraid to dip into the savings for the long-term benefits of home ownership

Borrow Money: Many people borrow money for a down payment. They may borrow from a relative, friend or even take a loan from a 401k or 403b retirement plan. If you do decide to borrow the down payment, be sure to review of all the consequences first. For example, if you take a loan from a retirement plan, you should definitely consult a tax professional to understand the consequences.

Furthermore, in these tough economic times, there are websites popping up where borrowers can request funds from others seeking to lend funds for interest.  One such site is www.prosper.com.  There are also plenty of excellent testimonials from successful borrowers on the site that you can review. 

Sell Items on eBay or Craigslist: This is becoming very popular for first-time home buyers.  You’d be surprised how many things you have around the house, or even stuff you forgot you had at your parents’ house! Try taking items you don’t need any more and sell them on eBay to make extra cash for your down payment. You can also try to sell items on Craigslist, which is free and easy way to make some extra cash.  You’ll be surprised at how quickly your list of items grows.

Have a Yard/Garage Sale: Believe it or not, many people have lots of stuff around their home that they no longer need and you can sell it to make a few extra bucks.  Also, by having the yard sale early, you can avoid doing it again before you move into your new house.

Have Someone Give You Money: Ok, some of us may not be this lucky but this may be a legitimate opportunity for others. I guess it cannot hurt to ask a parent, grandparent or other close person in your life if he or she would be interested in giving you a “gift” to use as your down payment. You may have to provide documentation of the gift (usually a signed letter from the gift giver) when you apply for a loan/mortgage to show how you obtained these funds.

IRA Withdrawals: The IRS will allow a one-time withdrawal of up to $10,000 from a Traditional or Roth IRA without penalty if you are under age 59 1/2. Certain restrictions apply, so be sure to check out the IRS website for more information.

Apply for FHA Loan:  Many first-timers turn to the FHA for their first loans primarily due to easier qualifications standards and more commonly for the lower down payment requirements.  With and FHA loan, your down payment can be as low as 3% of the price of the home (only until December 31, 2008 - after that, you’ll need a 3.5% minimum down payment).  So on a $250,000 home, at 3% down, you would only have to come up with $7,500, and for most, that becomes workable.

So as you can see, there are options out there.  Sit down, write them out and methodically go through all of your options to see what you have available.

I hope this helped.