10 Ways to Save for Down Payment on a House
There has never been a more attractive time for buying a home, and most of us will never live long enough to see conditions as great as this again. Yet, many individuals feel held back from the opportunity and need to buy a home due to lack of down payments. So how can more find the down payments they need to take advantage of all the perks the current housing market offers? Here are some useful tips to save for down payment on a house.
10 Ways to Save for Down Payment on a House
1. Fixed Saving from Your Paycheck
Perhaps the most obvious, but also most challenging ways to save for a down payment for buying a home is to set aside a fixed amount from your regular paycheck consistently. This could be a percentage, or specific dollar amount. This can even be automated by transferring money to a dedicated savings account from each week or month.
2. Curb Expenses
For those struggling to find a surplus in their income and budgets consider curbing some expenses. Easy ideas might include eating out less, packing your own lunch, opting for less expensive coffee, being proactive about maintenance and health care, finding ways to pay less in taxes each year, shopping sales versus paying full price, ending subscriptions to services you no longer use, etc.
3. Cash Back Rewards
Some individuals have a very difficult time finding the income or budgeting cutting to set aside money for buying a home, despite the great benefits. Instead many can find that switching payment methods and using a cash back rewards card for all expenses can create that surplus without any hit to lifestyle. For example; if you are making $60,000 per year, but spend everything you make every month; even receiving and setting aside cash back rewards of 1% means $600 you can set aside for a down payment each year without making an extra dollar, or even forgoing a single cup of coffee.
4. Take a Side Gig
If you have the time, why not take a side gig to generate money specifically to set aside for buying a home. This could be a night job at a local business, blogging, travel photography, or blending another hobby with making money.
5. Employer Matching Programs
Some employers have substantial funds set aside for helping employees with housing, even though they may rarely advertise or proactively offer them. Others offer matching contributions to retirement savings plans which may be tapped or borrowed against for buying a home. This can provide incredible traction.
6. Family
Today many family members might benefit from helping other family members with down payments as loans. However, those that don’t want to borrow from family could ask for money to be deposited into a savings account in lieu of annual birthday and holiday gifts. This could add up very quickly.
7. Crowdfunding
Building on the above, and going a step further some might take to crowdfunding to fundraise and save for their down payments. Platforms like GoFundMe allow ongoing, long term campaigns and the addition of off and online contributions.
8. Rent to Own
While sometimes an inferior solution overall, some that are unable to qualify for purchase mortgage loans now could opt to rent to own programs which contribute a portion of their rent towards down payments on homes. This can be combined with a conventional mortgage loan after a couple of years when credit is improved.
9. Invest Savings to Accelerate Growth
The problem most face in saving for a down payment is that home prices and interest rate increases quickly erode any gains made by saving. For example; even if saving $10,000 per year, if your dream home goes up $100,000 in price and rates rise, many may never get to the point they need just by saving alone. Investing these funds can help keep pace with inflation.
10. Buy Real Estate
Building on the previous point; specifically investing in real estate, lots, or even choosing a more modest starter home to begin with can be the best way to gain traction in down payment. The equity appreciation on a modest condo over a year or two could easily provide the down payment for your dream home all by itself.
Finally remember that there are 100% financing mortgage programs and local down payment assistance programs out there to take advantage of too.
