How do you accumulate money for a down payment? There are sources of money both acceptable and unacceptable to lenders, and you need to know the difference. The following sections describe some of the best ways.

Do whatever it takes to start saving. Yes, it's awful to keep paying rent, but by cutting back severely on your expenses, even if it means moving back in with your parents or other family, you can put aside more money for that down payment. (If you need to create a budget, you'll find a form to do so in Appendix E.)

Family gifts are acceptable as part of certain loan programs, including the FHA, so ask various lenders if they can be applied successfully. At the same time, communities may have access to federal dollars that can help assist with down payments. The annual IRS gift-exclusion amount is adjusted annually to reflect inflation (it's $12,000 in 2007), so you and your donor should check with the IRS to ensure the gift you receive is meeting the right guidelines. A family member or friend who gives you this money might be able to do it in a one-time payment that's a multiple of the annual gift-exclusion amount for that year.

Why not? If you are near your annual salary review and you have enough solid evidence that your boss loves you and wants to keep you, start gathering up your courage and notes on what you've accomplished for the year and ask to boost your income. Understand that “I want to buy a house” isn't a good enough reason to ask for a raise. Instead, your performance should support an overall request for a raise that will hopefully put you in a home.

There are ways to buy a home without putting 20 percent down, but in an uncertain real estate environment, it is essential that you pay attention to building equity in that property from the start.

Check this plan with your tax or financial professional, and talk it over with potential lenders as well. Items that are appraised for verifiable value, which you can prove belong to you, may — and that's a big may — be used for a down payment. If you have a famous painting that's been appraised at a particular value, it might be allowed as collateral toward a down payment. Just remember that if you don't pay your loan on time, there goes the art collection.