down-payment-tips

So, you’ve decided you want to buy a house. Congratulations! As you start your transition from renter to homeowner, you’ll need to start thinking about saving money for a down payment. You may be surprised to find out you already have the money available to buy a house—it may just be hiding.

Keep reading to learn how you can master the true art of stretching a dollar and discover 15 places your down payment might be hiding.  

The Golden Rule: Make a budget and stick to it!
If you haven’t done so already, set aside some time to evaluate your finances and make a budget. To get started, take a look at how much money you’re brining home each month and determine how much needs to be allocated toward paying bills. Once you’ve figured out how much disposable income you have leftover, set a goal for how much money you want to save each month and look for ways you can cut back on frivolous spending.

Take advantage of direct deposit
Each payday, transfer a fixed amount from every paycheck into a dedicated savings account you’ll use for your down payment and watch the account grow. Without that money readily available to use, you won’t be tempted to spend it in other places. As the saying goes, “Out of sight, out of mind.”

Cut the cord on cable TV
Have you ever considered canceling your cable service? With new technology offering more ways to stream movies and TV, you can still enjoy your favorite shows while saving money in the process. This blogger survived life without cable TV and saved $1,400 in the process.

Stash your cash the smart way
If your goal is to buy a house within one to two years, and you already have a decent down payment fund started, you may want to consider temporarily putting that money in a CD account. Why? Because CD’s often have better interest rates than standard savings accounts, and they are a low-risk way to invest and grow your money.

Save at the checkout line
Don’t let grocery shopping eat into your down payment fund. Buying generic store brands instead of brand-name products can help you save an average of 25% on your monthly grocery bill.

Tuck away your tax refund
Tuck away a portion of your tax refund and use it to grow your down payment fund. Put that money in a special savings account dedicated toward your down payment and don’t intermingle it with your regular savings and checking account.

Skip the takeout food
Instead of ordering takeout, make a home-cooked meal for dinner tonight. At three-dollars per serving, these 20 recipes from Better Homes & Gardens are easy on your wallet and your waistline.

Try living off of one income
If you’re really serious about saving for a down payment on a house, and are a two-income family, try living off of one income for a short period of time. I know this can be hard to do, but if you make a budget and really buckle down, you’ll be surprised what you can do! This couple saved $20,000 toward the purchase of their first home this way.

Be green to save green
Conserve electricity by turning off lights and investing in eco-friendly appliances. This minor change can really add up. You’ll be pleasantly surprised when you receive your next electric bill.

Start packing a lunch for work
Start bringing your lunch to work. By skipping that five-dollar sub, you could save $1,300 a year. That’s a lot of dough!

Take your coffee to go
That morning trip to your local coffee shop is costing you “a latte.” At four-dollars per drink, that morning coffee adds up to approximately $80 a month, or $960 a year! Buy a reusable thermos and start brewing coffee at home to take with you on your ride to work.

Pocket spare change
Put all of the spare change you find in a jar and take it to a Coinstar machine when it’s full. This may seem silly, but you’ll be surprised how fast those nickels and dimes can turn into dollars and cents!

Make use of gift money
A gift of money is a perfectly acceptable form of down payment, as long as you can document the source of all funds in your account. To make the underwriting process as seamless as possible, make sure to have all of your money deposited in your account at least 60 days before applying for a mortgage.

Evaluate low-cost down payment options
Although conventional wisdom says you should put 20% down on a house, this is not required to buy a home. To help put homeownership within reach, there are a wide variety of low down payment loan programs available.

What are some creative ways you’ve saved for a down payment? We’d love to hear your money saving tips in our comment section! 

Tim Merritt

With more than 26 years of experience, Tim Merritt brings a wealth of knowledge to his role as a mortgage consultant for Ross Mortgage Corporation. Tim's dedication to his borrowers has helped him earn several industry awards for service excellence. Tim currently resides in Wixom with his wife of 23 years, four children and two dogs. In his spare time, you may find him playing, coaching or officiating a soccer match. He also enjoys woodworking in the winter as well as motorcycling and boating in the summer.

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