When we bought our first home, we were scared stiff wondering whether we really could afford it at all. The year was 1975 and our daughter, Meredith, hadn't had her third birthday yet. The house was selling for $51,000, and you could get a conventional mortgage with only 10% down, without paying private mortgage insurance.

To be honest, neither of us remembers exactly how we found the $5,100 to put down, and the entire closing procedure has been erased from memory, much the way trauma victims suffer amnesia after a shocking event!

Young couples - those who can get a mortgage because of new, tighter lending standards due to "sub-prime" mortgage problems - are always calling us now, shaking in their shoes about buying that first home, and who can blame them at a time when $300,000 isn't going to get them a heck of a lot, especially in a large metropolitan area (even in the current real estate slump, although there are some nice bargains around).

We can't do anything about the high cost of buying a home today, but we can help you with some smart money moves for your down payment.

Good for you if you've been saving your money since your first after-school job and you already have enough to make a down payment. If you've accomplished this amazing feat, you should be listed in Ripley's Believe It or Not! The total amount of money that Americans have saved in recent years amounts to no more than 1% of total disposable income. (As you can imagine, we have strong feelings about this, but we'll save them for another time!)

Americans are horrible savers! On the other hand, there are a few other ways of obtaining the money for a down payment. Some of these techniques are okay, some are not.

Dolan-Approved Sources

Your in-laws (or parents) are willing to make the down payment. Most likely you will set this up as a "shared equity" transaction. If a relative puts up the money, he or she will most likely want to share equity in your house, taking a portion of the profit or loss when you sell the house. This partnership might be your ticket to a home of your own. But a business arrangement with close family members is a very tricky thing. Have a real estate lawyer handle the details and draw up a partnership agreement that all parties agree on.

Rent a house with an "option to buy." Just as you can lease a car with the option to buy, a landlord might be willing to draw up a contract that gives you the right to buy the property during an agreed-upon period. In fact, this option makes more sense with a home than it does with a car, since cars depreciate the longer you own them. You agree up-front to a purchase price. Part of your monthly payment is credited toward your down payment if you exercise your right to buy the home.

It's a win-win deal. You get to see if you like the house and the neighborhood and you get the benefits of appreciation if the value of the property rises during your tenancy, because the price that you'll pay is locked in when you signed the agreement. If the house depreciates during the term of the lease, you may elect not to buy. The seller gets income while you're renting. You should, however, pre-qualify for a mortgage before you enter into this kind of agreement. Again, consult a real estate attorney.

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