Ready to buy your first home? Don’t be intimidated by the down payment. By using a few of these easy tricks, you can save all the money you need.
What is a down payment?
A down payment is a cash payment made upfront when you first buy a home. Even if you’re planning to get a mortgage loan, you’ll still need to pay some cash for the initial down payment.
How much money do I need for a down payment?
Most mortgage companies require an initial down payment of 3%-20% of the home’s total value. So if your home budget is $200,000, you’ll need $6,000-$40,000 for the down payment.
Fast, easy tricks for saving money
- Create a separate account. Create a new account that is dedicated exclusively to saving money for your down payment—and don’t spend it on anything else.
- Earn interest. If possible, try choosing a savings account, money market, or CD that generates interest on your down payment—earning you even more money.
- Autodeposit a portion of your paycheck each week. Use autopay to directly deposit a portion of your paycheck into your dedicated savings account so you’re not tempted to spend it. $100/week, $50/week, or even $25/week makes a difference!
- Add it to your wedding registry. If wedding bells are in your future, ask for a down payment donation as a wedding gift.
- Request donations for holiday and birthday gifts. If your family and friends enjoy giving gifts, why not ask for a gift to your down payment fund?
- Take advantage of income tax refunds. Deposit any tax refunds into your new, dedicated savings account.
- Use an app. New apps like Acorn can help you save for big goals by automatically investing your spare change—from your tablet or smartphone.
- Start a “home saving jar.” Every little bit counts, including spare dollars and coins. Leave a coin jar on the kitchen counter, and empty out your change—plus any $1 (or even $5) bills—every night.
Don’t forget about other costs!
Remember, you’ll need some cash for other expenses when you buy your home. While you’re saving, it’s a good idea to plan a few extra dollars for:
- Closing fees
- Moving expenses
- New furniture
- Repairs (if needed)
- Utility deposits
HomeServices Lending can help you find a loan that meets your goals. Contact us today.