4 Tips for Saving for a Down Payment

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The reason most renters don’t make the move from renting to home-ownership is the initial cost. Typically, house-hunters should be prepared to make a down payment of 5-20% of the home’s cost to qualify for a loan (although there are some exceptions). This big number is scary and may deter potential homeowners from even trying to save that much money. Follow some of these tips to saving money so that the dream of home-ownership can become a reality!

1. Create a Savings Dedicated ONLY for Your Home

Even if you already have a savings account, it is easy to start seeing some money in it and want to treat yourself. It’s great to have a general savings account for a rainy day, but creating a separate account solely for your future home may help you keep the money in your account. Make it a rule to never take money out of that account- until it is time to drop it on your new home.

2. Make a Budget

Budget what you typically spend in a month to see where your money is really going. This will help you see where you can realistically cut back to save. It might be as simple as bringing lunch into the office instead of going out to eat every day, or nixing that summer vacation.

3. Enroll in Automatic Savings

Many banks offer automatic savings enrollment, allowing you to set an amount to be transferred from your checking account each month. This small action can yield huge results within a year, without much effort at all!

4. Get Down-Payment Assistance

If saving up 5-20% just isn’t an option for you, then you may want to look into some other loan programs. FHA loans, for example, only require a 3.5% down payment. Learn more about FHA loans and if you qualify here.

Home ownership is possible if you follow some of these savings tips. If you are interested in learning more about financing a home, contact Home Point Financial Corporation today.