Saving Money for a Down Payment

Melanie 

Ortiz Reyes

Content Specialist

Saving money for a home can be intimidating, but it is achievable. There are many ways you can save money and work towards your goal. We’ve put together a list of tips to set you on the right path:

• Set a Target - Determine how much money you’ll need for a down payment and factor in closing costs. Next, decide what your home price range and down payment will be based on the mortgage type and what lenders require. This is typically around 5% - 20% of the home’s purchase price. 
   
• Determine a Budget - Consider your income and monthly expenses by analyzing your spending habits. This will help you identify where to cut back and put more money into your savings. Dining out and subscriptions are an excellent place to start.
   
• Track Spending - Always ask for a receipt and keep a record of all your expenses. Creating spreadsheets is a great way to monitor your spending. Update this sheet on a weekly basis. 
   
• Cut Back on Housing Costs - If you’re currently renting, consider downsizing to a less expensive rental or getting a roommate. Sacrificing the comfort of a bigger rental will help you speed up your savings. 
   
• Reduce your Debt  - If you have a balance on your credit card accounts, consider paying these off as quickly as possible. Reducing your debt will not only speed up saving enough money, but it’s likely to also help increase your credit score. 
   
• Automatic Transfers - You can set automatic transfers from your checking to your savings account. This will ensure consistency and make it easy to stay on track toward your savings goal. 
   
• Increase your Income - Taking a side job or doing freelance work will supplement your primary income and put you in a better position to buy a home. In addition, there are many opportunities like pet sitting, food delivery, becoming an online reseller, mystery shopping, and taking online surveys. 
   
• Save Bonuses - If you receive unexpected money, consider putting a significant portion, if not all of it towards your savings. You can also research homebuying assistance programs such as down payment assistance. Take advantage of potential opportunities if you meet the eligibility criteria. 

Saving money for a home takes time, patience, and careful planning. With dedication, sacrifice, and smart financial choices, you’ll soon be moving into your new home.