There is no way around it; buying a home is a big deal! It’s an exciting opportunity to build new memories in a space that is truly your own. Part of embarking on the path toward homeownership is saving for the down payment.
Luckily, there are straightforward techniques you can use to save for the down payment on your new home. Here are some of our favorite ideas:
Decide how much your future home is going to cost.
While having an exact amount in mind can be challenging, knowing the approximate amount you will need is a crucial step toward saving for a down payment. Researching comparable homes on Zillow and homebuilder websites can give you a close estimate of how much your dream home may cost. A mortgage calculator is a useful tool as well.
Make Big Events About Your Home!
Deciding on a gift to bring to a milestone occasion can be stressful for attendees. (Tactfully) let your friends and family know that buying a home is your priority and that contributions to your down payment fund would be much appreciated. Whether you are graduating, getting married or celebrating your birthday, this is a great time to incorporate contributions to your down payment.
Create a Sustainable Budget
How to spend money is a tricky subject. Some people stick to a strict budget whether or not they are saving for a large purchase. Others have a general routine that roughly relates to how much they spend monthly. There are also those who make it work without paying much attention to finances. Whatever your usual method, budgeting is extremely helpful when saving for a down payment. Try Mint.com and BudgetTracker for helpful, high-tech budgeting tools.
While your credit score does not directly impact how much money is in the bank, it does influence your future mortgage options. Be sure to check out our downloadable free credit score guide.
It’s natural to be intimidated by saving a lot of money at one time. That being said, it’s easier to be motivated by a large savings account than a small one. Proximity to your goal can mentally help accelerate the process of saving for a down payment. For example, try putting $500 in a savings account specifically for your home. This way, you will feel closer to your goal than starting from a $5 savings account.
Set Your Timeline
CNN Money provides saving steps depending how far in the future you plan to purchase a home. Saving strategies vary if you’re planning to buy a home in one year versus five.
Buying a new home is an exciting time. Learn more about saving for a down payment.