The most intimidating part of purchasing a home can be saving enough money for a down payment. A typical down payment on a home is 20%. This can seem like an impossible sum to reach, especially if you live in an active marketplace. There are simple, small steps you can take to save everything you need and purchase the home you really want.
Transfer a fixed amount of money into a savings account every paycheck.
This is the most popular and simplest way to build your savings. You can decide the time period you’d like to have a certain amount saved, and work out how much money you will need to put away each month in order to reach that goal. There are even apps you can download for free on your phone that help you stick to your savings plan. Over time, you can save bits and pieces without you ever having to touch your accounts.
2. Skip vacations for a year. This one isn’t fun, but if you have set this goal for yourself and you are determined, then you will save money. Opt instead for a “stay-cation,” which is staying home for your vacation and enjoying your hometown, or even just spending a few days by the condo pool. You could save potentially thousands that would have been spent on travel expenses like plane tickets and fuel costs.
3. Lower your expenses. Budgeting is the simple, old-fashioned way to save. Cut back on going out, invite friends over for movie nights, or stay in with your significant other more often. This $50 or $100 here and there could save thousands in just one year.
4. Get rid of unnecessary debt. High-interest debt is crushing, and it can also have a serious affect on your credit score when the time comes to seek loan approval. Pay off your high-interest debt, or consider paying it down and transferring the remaining debt to a low- or zero-interest program that won’t affect you when you move forward to make your purchase and you need to have that extra cash on hand.
5. Research down payment assistance. There are organizations that can assist you with your down payment, especially if this is your first home purchase. Look into Federal Housing Administration, US Department of Agriculture, or even Veterans Affairs. Local housing authorities sometimes have assistance programs for buyers as well.