02 April . 2021
Tips for Saving Your Down Payment
Tired of renting and ready to own? We get it. As home prices continue to rise the pressure to buy a home right now is real. There’s just one problem: You don’t have a down payment for a house yet. Saving for your down payment can feel like an uphill battle, but you can do it. It’s simpler than you think when you have a plan.
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Set up an automatic payment to your savings account every pay period.
This is the most popular—and convenient—way to save. Set up an automatic direct deposit into a savings account. Commit to never use these savings for any purpose other than your down payment. Consider starting a high-yield savings account, CD, or storing your savings somewhere more difficult for you to access (mark this account as off limits). Save any financial windfalls, like a tax return, to the “off limits” account.
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Borrow from a relative.
Many parents or relatives help out when it's time to buy a first home. Gifts can come from your family, spouse or a domestic partner. Just be sure to include the amount of the gift on your loan application.
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Lower your expenses.
Review your expenses and look for what you can reduce or eliminate. Put the money you would have spent on these items into your down payment savings account.
Where You Can Cut Spending:
• Making daily coffee shop runs.
• Eating out regularly.
• Going out to the bars.
• Take stock of your subscriptions.
• Travel.
• Giving yourself manicures or doing your hair at home.
• Attending concerts, plays and other performances.
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Look into down payment assistance.
Some organizations might help you with your down payment. See if you qualify with the Federal Housing Administration, the US Department of Agriculture Rural Housing Service and the Veterans Administration. Also, check out our blog, Grants May Help First Time Home Buyers, to see if there is a program that’s right for you.