How to ask people for money for a down payment. Tactfully.

There are many polite, not-awkward ways to respectfully request loans from loved ones to help with your down payment for a home.

Benjamin Franklin once said, “If you would know the value of money, go and try to borrow some.”

It seems like adages that warn against lending money to loved ones are almost as old as money itself. And, to be honest, there have been legitimate historic reasons for the taboo. These have resulted in cautionary tales from bad prior experiences and disappoints: Verbal-only agreements, lack of alignment on payback, even radio silence and denial have strained far too many relationships over money.

The bad news: Most of the problems that came from lending money to friends or family came from a lack of documentation. It created a historic ‘taboo’ on social loans.

The good news: This awkward problem can be 100% resolved with clear, written agreements.

Now that crowdfunding is more popular than ever, people are used to seeing asks from loved ones shared on social media. Friends and family visiting a crowdfunding ask page and can offer to chip in and help. People LOVE helping one another, it’s a beautiful thing about humanity.

That’s why we built HousePlant: a place for prospective homebuyers to create and share an inspiring ask for gifts and loans that go toward a bigger down payment. Check it out!

Remember, if Uber can make it not awkward to get into a stranger’s car and AirBnB can make it feel completely normal to stay in someone’s house, HousePlant can make it less awkward for people to loan each other money. With the right technology platform, you can appeal to people’s higher callings to help out and use the transparency of a clear, easy platform like HousePlant to soothe any nerves about pitching in.

After all, buying a home is a beautiful and important life milestone that people would love to be a part of! This Experian article notes, “According to the National Association of Realtors, 28% of younger millennials used a gift or a loan from a friend or family member to purchase a home in 2020”. With the right best practices and smart moves, you can definitely be a part of this growing movement!

START HERE:

Whether you are using HousePlant as an alternative to a traditional wedding registry (who needs more toasters at this point?!) or sitting down with family as you are trying to get $10k closer to a winning down payment, here’s how to ask your community for assistance with a compelling, and tactful ask:

1. Start with your “Why”.
   What is your goal in buying a home and what dream is it connected to? Have you always dreamed of being a homeowner? Are you excited to buy and stop paying equal or higher rent so you can start building long term wealth? Do you need more space for working from home or a backyard for your new puppy? Help people catch a glimpse into where you are in your life and what your goals are so they can understand how and why they can help you.
   If you are making a HousePlant ask instead of a registry for a wedding or graduation, it’s great to politely say why.
   
   EXAMPLE: ”We are so excited about this special life milestone. While we already have all the dinnerware, pots and pans, and household items we need, we’d love to invite friends and family to instead join us in supporting our journey to buy our first home! Chipping in toward a down payment really adds up and makes owning a home a real possibility for us. We’d be honored to have the support from our loved ones and thrilled to celebrate a house-warming with you that YOU helped make possible!”
   
   

2. Be real about “What” the challenge is in today’s market.
   Prospective homebuyers on HousePlant will want to have saved up at least half of their target down payment on HousePlant before asking others to pitch in. Showing you have already saved demonstrates to your community that you are serious about buying a home and financially responsible.

   
   Once you can mention that you have saved up a significant amount, people will be more likely to offer to chip in to help you close in on your goal. It can be helpful to mention on your ask page that home prices have gone up significantly and the extra amount for a down payment will help your offer get accepted. Another option is to ask for your community’s support to beat the expensive impacts of interest rate increases. You can use the HousePlant down payment calculator to show how much even $5,000 or $10,000 extra in a down payment can save you in interest costs over the life of your loan. Then explain you’d rather have interest going back to people you know then sending it all to a lender, a win-win for everyone.
   
   EXAMPLE: ”We’ve saved up half of our down payment and are serious about buying a home. We know with a bigger down payment, we could more likely have our offer accepted for a house in our hometown, and putting down 20% instead of 10% would save us over $50,000 over the life of the loan!!! We would SO rather borrow and repay (with interest) people we know and trust and have that extra money stay in the community!”
   
   

3. Talk about “When” you can repay loans.
   Offers made on HousePlant are flexible, people can stipulate in their offer if they want a monthly payback installment with interest or to be repaid with a full lump sum by the due date. When you accept an offer, it becomes an Agreement that is documented between you and the other person. So be sure you can make good on it!

   Think about when you realistically can repay people and why, then communicate that transparently in your ask. Remember, you’ll also be paying your new mortgage! The more you can show upfront in your Ask that you have thought about this and have a practical timeline proposal, the better.
   
   EXAMPLE: ”We’ve done careful budgeting and run the numbers, and are confident we could repay all our HousePlant loans with interest back within 8 years.”

   While we are talking about timing: don’t forget, you’ll want to receive, document, and deposit loans and gifts in your down payment savings account at least two billing cycles before you formally apply for your mortgage. Money should be deposited for 60+ days in an account to be considered ‘seasoned funds’ and raise less issues in your mortgage application. If you use HousePlant, it’s easy to provide PDF documentation of all loans and gifts from when you apply too!
   
   

4. Thank your loved ones for considering and keep building your relationship.
   When friends and family give or lend money, it adds another layer to your relationship with them. It’s good to acknowledge it, build trust through documentation, and express gratitude for the support.
   
   EXAMPLE: ”It’s been so exciting to see these gifts and loans helping us get closer to our dreams of buying a home. We really appreciate your consideration.. it really makes a difference in our lives and we are so grateful for any help or support. See you soon!”
   
   

5. Include a picture.
   They really are worth a thousand words. Buying a home is a lot of work, but ultimately, it leads to a moment of pure JOY. Share that feeling and it’s magnetic.

Good luck creating your ask! Set up an ask page for free on HousePlant today, and let us know how it goes.