4 Great Ways To Save For Your First Home Down Payment

Posted on: 12 May 2016

One of the most challenging aspects of buying your first home is coming up with the down payment. For many people, being able to afford monthly mortgage payments is no problem, but saving a large sum of money to cover the down payment is a huge obstacle. Luckily, with a little creativity and hard work, saving for your down payment can be much more achievable than you may think. Here are four ideas to try out:

Downsize Your Rental

Since, for many people, housing is by far their largest expense every month, finding a way to lower your monthly rent costs can be a huge source of savings for a down payment. This may mean moving into a smaller apartment for a while, or even moving in with family to live rent-free. The key is to set aside the money you save on rent every month in a savings account specifically earmarked for your down payment.

Consider an IRA Withdrawal

If you have an IRA retirement account, you may be eligible to withdraw up to $10,000 from it without penalty as long as the money is going toward a home down payment. If you're married and your spouse also has an IRA, they are allowed to do the same, giving you up to $20,000 total for your down payment.  

Set Up a Wedding Fund

If you are getting married soon and hoping to buy a home together as newlyweds, you may want to set up a down payment fund that friends and family can contribute to instead of a traditional registry. Your friends and family will likely be spending money on a wedding gift anyway, and if you explain that you are hoping to buy your first home soon, they will probably be happy to help contribute.

Start a Side Business

Another option is to start a part-time business that you work on after work and on weekends. This might be a freelance writing or web design business, driving a car for a company like Uber, or even offering dog walking or house cleaning services. Live on the money from your regular job and stash away all the extra money you earn from your side business to go toward your down payment.

Saving for a down payment is achievable, even on a budget. By trying a combination of these four ideas, you may be able to come up with a down payment much sooner than you imagined. For more information about preparing for the home buying process, contact a company like Felte Real Estate.