Landlord Blog
Education and news for smart DIY landlords!
How To Save For A Down Payment On A House: 10 Practical Tips
Down payments for a home in the United States typically cost 20% of the house’s price. If a home costs $200,000, then the downpayment for it would cost $40,000. That’s still too much. But no matter what the cost, you can still afford to pay for it by mindfully saving money. How to do that? Follow these tips.
1. Make a clear down payment savings goal
Determine how much money you want to save and put a deadline on achieving that amount. Then, divide the total savings goal by your money-saving timeframe. For example, if you want to save up $130,000 in a span of 3 months, divide 130,000 by 3. The answer is 43,333. This means you should save $44k/month.
2. Cut some expenses from your budget
Stop paying for subscriptions like Netflix, Amazon Subscribe & Save, Amazon boxes, Amazon Prime, Hulu, Xbox Live Gold, PlayStation Plus, Spotify, Cable TV, Modem, HBO Go, HBO Now, etc. Avoid online shopping as well unless necessary. Eat at home. Focus on your needs, not your wants.
3. Pause on paying retirement savings
Tell your insurance or retirement plan agent to put a temporary pause in your monthly payments. You can still catch up with what you missed after you have successfully saved up the downpayment for your dream house.
4. Set up a special automated savings account
A special automatic savings account will automatically deduct money from your paycheck account at regular intervals. Just authorize your bank to do so. This will help you save up money for your down payment by preventing you to spend out of temptation.
5. Skip vacations
Vacations take a huge chunk of our yearly earnings. You pay for travel, accommodation, food, souvenirs, etc. Find ways to affordably unwind in your local area. Spend time with your family, friends, and coworkers.
One way to prevent the temptation of going out of town is to watch travel blogs. If you’re working in a corporation, wait until there’s a company vacation. Suggest it if you have to.
6. Reduce your high-interest debt
Credits are the #1 reason that many people are living from paycheck to paycheck. If you want to successfully save a downpayment for a home, then avoid getting into debt and avoid high-interest credits. Pay off all your high-interest credit cards and close them before saving up. You might as well transfer your high-interest debts to your low-interest cards.
7. Banking windfalls
Don’t spend your unexpected blessings. Save cash gifts, income-tax refunds, bonuses, large commission checks, 13-month salaries, or even the sale of personal assets into your special bank account. This will help you complete your down payment savings as early as possible.
8. Keep an emergency fund first
Before anything else, save up emergency funds first so that you won’t get to take money from your down payment savings account. A good $5,000 dollars would be enough to cover medical, unemployment, car repair, or rental expenses.
9. Get a second job
If you don’t have much to do and you feel you won’t be stressed in working extra hours, then use that time to work a second job. Start a $100-weekend business if you have to.
10. Look into some payment assistance
Private lenders and government financial organizations can help you reach your down payment within a short time. Check if you qualify to be assisted by the Federal Housing Administration, US Department of Agriculture Rural Housing Service, or the Veterans Administration. It’s also good to check local housing authorities for programs that would benefit you.
Cut unnecessary expenses and get familiar with private and government financial assistance programs. See to it if you’re qualified to receive financial aid. Buying a house is expensive. Even the down payment costs thousands. But you can always reach your saving goals if you know how to make financial sacrifices.
Knowledge is wealth that cannot be stolen. Learn more about real estate topics by reading these articles: