All these answers are great and correct! If you have 40K down, think about using a more common 10% down--conventional loan, offering well above asking price, and using your extra cash to promise you'll buy the home, even if your offer price is above appraised value. Example: Home is listed at 100K. You offer 120K. The appraisal comes in at 100K--not enough to match your offer of 120K. So, your loan is 90 K (you're putting down 10%, don't forget), and you add the other 30K to cover the difference between appraised value and contract price. It's aggressive, sounds crazy, and you're buying above value, but so are all the cash offerors. You have to compete. The market seems to be going up, so theoretically, your home should be worth more in the next six months.