I’ve tried to write this post so many times that my head hurts.  I’m just going to keep it really simple this time.  If you’re not buying a house using a bank mortgage, you can “Crowd Source” all or part of your down payment.  That means that you sign up on a site like Prosper.com or LendingClub.com, apply for a loan, and people all across this great nation of ours lend you money, 25 bucks at a time.  It’s downright awesome.

I borrowed 10 grand using LendingTree.com and got an interest rate of 6.25%.  If you have good credit, that’s about the rate you can expect.  Bad credit?  Well with higher risk comes higher borrowing costs and rates can go as high as the mid-20s.

As a quick disclaimer though, buying a house with basically no money down is a great way to magnify your returns but you are also exposed to higher risk if the investment doesn’t produce as much income as you had expected.  This is exactly why banks don’t let you borrow your down payment in this way.  They want you to have more skin in the game.

Just look at these sites as effective sources of funding and at least check there before you go to any hard money lenders or put a down payment on your credit card.