Sounds like a silly question at first, but can you borrow money for your downpayment? In general, the answer is no. Your funds needed for your down payment, closing costs, and cash reserves need to come from an account you own such as a checking or savings account with your name on it. Lenders will need to verify not only the existence of these funds, but that they belong to you, and you have access to them. This almost always means your bank accounts. But it might surprise some, but you can borrow those funds from allowable sources.

One of those sources is your 401(k) account. Most such accounts do allow you to borrow against them. Different accounts can have different restrictions but in general you can borrow up to a certain percentage of the amounts in those accounts. You’ll need to provide documentation regarding the accounts stating that yes, you can borrow against them and how much you can borrow. If monthly repayments are required, these amounts will be reviewed. Lenders will want to make sure you have the ability to repay the loan and still be able to qualify. However, most of these accounts do not require monthly payments. You’ll need to check with your account holder to make sure.

You can also borrow against an existing appraisable asset. In the lender’s eyes, an appraisable asset is anything that holds value and is verified by a third party. That means something like an automobile. An automobile can be independently appraised. In many instances, a lender will look up the current appraised value from something like a Kelly Blue Book or something similar but will also need someone to independently verify the car to check its condition, mileage, and such.

Artwork, coins, pretty much anything that can be appraised can be used for a down payment and closing costs. You’ll want to speak with your loan officer and let the loan officer know where you’re going to get the needed funds to close, it’s not something you can just show up to the settlement table with. The lender will definitely want to source your necessary cash before your loan papers are even printed. There’s some legwork involved when borrowing from an appraisable asset you own, but it can be done. Just make sure your lender knows in advance. Remember, if there are any payments that need to be made when borrowing from the asset, they’ll be counted against your overall debt to income ratio.