No one said coming up with the money for a down payment to buy a house would be easy. More often than not, to save enough money, you’ll have to make a few adjustments to your lifestyle. Thankfully, you don’t have to make any major changes to add to your savings account. Here are five strategies that will help you get to your target amount.
1. Cut back temporarily
Love those $4 lattes? They’re costing you $1,000+ per year if you buy one every workday. Have the deluxe cable TV package but watch only three channels? That’s probably running you another $1,000+ per year. Luxuries like these are ideal places to dial back expenses while you save up for that down payment. By eliminating the two above — or replacing them with cheaper alternatives like home-brewed coffee and Netflix — you’ve already got an extra $2,000 in the bank at the end of the year.
2. Try automatic savings
Most banks allow you to set up recurring transfers so you can consistently add to your savings. Alternatively, many employers can split your direct deposit into two separate accounts. In either case, you’ll be sure to set aside savings every pay period.
3. Dial back your smartphone
Do you really need that wireless hot spot for $20 a month? Do you use all of your minutes? Can you share a cell plan with your partner (especially if you’re planning on buying the home together)? If you can’t find ways to save yourself, call your cell provider and say you’re getting ready to jump ship. They’ll be happy to help you find savings. If they can’t, switch to a provider that will. You could be saving hundreds of dollars per year that could be put toward a mortgage.
4. Ask the family
Asking a family member for a loan can be awkward. Yet, in a recent survey conducted by Trulia, over 55% of respondents said they will ask their parents for help with their down payment. There are several ways to go about it, from borrowing against retirement savings to receiving an early inheritance to nontaxable gift options that will move money from a family member’s account into yours.
5. Explore down payment assistance programs
Did you know that there are state and federal programs that can help you with your down payment? Do a Web search for <your state + down payment assistance> as well as <your city + down payment assistance> to find local programs and qualifications for each. Most of these local programs are backed by federal funding. Keep in mind that there are oftentimes income limitations that determine who can qualify. Early research will help you understand what’s available in your area and for your specific financial situation before you start looking for a home.
And finally, go ahead and have a sit-down with a mortgage lender — the earlier the better. They’re sure to have more creative ideas to help you save and find the money you need to plant the seed for your dream home. Need help finding a lender? Start here on Trulia to find rates and lenders in your area. Happy saving!