Nov 9, 2017

Saving enough money for a down payment for a home purchase may seem like an overwhelming task. However, a little research, focus and dedication is all it takes to move closer to accomplishing this life-changing goal. Here are some basic tips that will help anyone to achieve the “American Dream” of homeownership.

  • Understand your down payment options. There are benefits to providing a 20 percent down payment, but you don’t always need to provide that much at the closing table when buying a home. For example, buyers who choose a loan program offered by the Federal Housing Administration (FHA) can provide down payments as low as 3.5%. Veterans of the US Military can apply for VA loans with as little as 0% down payment required.  And all loans, besides those used to obtain rental properties, allow gift funds for down payments as long as they come from close relatives or employers.
  • Reduce your current rent. For many young Americans, the monthly housing rent they pay is their biggest expense and reducing this amount is oftentimes the best way to substantially increase savings. Add a roommate, move into a more affordable place, or (if you are lucky enough) move back into a parent’s home for a year are all ways to drastically increase your monthly savings.
  • Sell your car. If possible, selling your car can immediately put funds in your bank account while reducing your monthly bills by hundreds of dollars a month once gas, insurance costs and loan payments are factored in. Of course, this may not be realistic if you live somewhere with limited public transportation. But couples with two cars may consider downsizing to one car if they can make it happen. 
  • Make more money. Asking for a raise, working overtime, finding a better-paying position, or adding a second job are obvious ways to make more money while looking for other ways to save funds for your upcoming down payment.