Saving for a down payment can feel overwhelming when you start. But it does not have to be! Break the saving process down into smaller steps, and with time you’ll see progress. Your first step is to determine much you need to save. This can be anywhere from 5% to 20% of the purchase price of the home you want to buy, depending on the type of mortgage you’re getting and your credit worthiness. Remember, the bigger the down payment, the smaller your monthly payments will be!
Here are some tips to save and start growing your down payment now. Start by creating a separate “Down Payment” savings account to put money into. This way, you’ll see it grow, and will be less inclined to use that money for something other than your down payment.
- Set up an automatic transfer to your down payment savings account from every paycheck that you earn. You won’t miss it if you never see it!
- Put your tax refunds, birthday money, holiday cash gifts or work bonuses directly into your down payment account without spending them.
- Make eating in a game. See how long you can eat from your pantry and freezer stock before going to the grocery store. Eliminate one restaurant meal a week. Stop getting coffee out every morning. Pack your lunch for work every day. Then put all that extra money in your down payment account every month.