4 Ways to Save for a Down Payment

If you’ve been putting off buying a home because you don’t think you can afford a down payment, it’s time to think again. There are loan options out there that don’t require any down payment at all, but it’s a good idea to start saving as soon as possible just in case. Advice like brown-bagging it for lunch is common, but here’s how to save big bucks and get that twenty percent saved up sooner.

 

  1. Slash big expenses. While it’s all well and good to cut back in areas like food and entertainment, going after the big expenses will really help you save. If you live alone, consider getting a roommate and putting away the money you save on rent. If getting a roommate’s not in the cards, look into downsizing on rent. A smaller place with cheaper rent should be fine for the meantime and will really pay off in the long run.

  2. Set up an auto-draft for savings. It’s much easier to save money when you don’t see it leaving your bank account. Check with your boss or payroll department and see if a portion of your paycheck can be deposited directly into a separate savings account.

  3. Cut back on retirement savings...temporarily! Reduce the amount you contribute to your retirement savings each month and stash some of that money in a separate savings account for homebuying expenses. Once you’ve got your down payment saved up, you can always readjust your monthly contribution.

  4. Ask for help. If all else fails, look to gift funds. Through websites like GoFundMe, would-be homeowners can set up an account for friends and family to send money to. This is a great idea for an engaged or newlywed couple in lieu of wedding gifts.

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