Ideas for Saving for a Down Payment for the Purchase of a House

One of the most stressful aspects of purchasing a home can be saving for the down payment.  In today’s market a much more substantial down payment is required in most instances.  A down payment of up to 20% is possible.  So, of course, everyone’s concern is where all this money is going to come from.

There are many things you can do to save for a down payment.  Below are just a few ideas.

Cutting Expenses

One of the easiest and quickest ways to start saving for a down payment is to cut expenses.  Look at your current budget and look for opportunities to save money.  Some options may be cutting back on your cable TV options to lower your monthly bill.  Make small improvements like replacing weather stripping in an attempt to save money on your utilities.  If you are in the habit of buying your lunch everyday start packing lunch.  Clip coupons to cut down your grocery bill.  If you look hard enough you can usually find ways to cut your expenses.  While saving a few dollars here and there may not seem like much it does add up.

Sell Your Assets

Over the years we all tend to accumulate more things than we really need.  Take an inventory of everything you own and figure out what you may not need anymore.  Have a yard sale for all those random items.  If you think you have something of value have it appraised and sell it.  When looking into selling assets think both big and small.  The toys your children are now too old for and the clothes you no longer wear are great for a yard sale and the money from small items at a yard sale adds up quickly.  A boat you hardly take out on the water or that motorcycle just sitting in the garage are big items that could bring in a lot of extra money very quickly if sold. 

Downgrade Your Assets

Another option similar to selling your assets is downgrading your assets.  That brand new $45,000 car may have been important to you when you bought it three years ago but you may find that buying a home is more important to you now.  If that is the case you may want to look into selling the more expensive car and buying a cheaper one.  You can take the money you made from selling the car minus what you paid for the cheaper new one and put it towards a down payment.  Different things are important to us at different times in our life so if there is a big purchase item that you could downgrade and still be happy it may be a good option to get that extra money for your down payment.

Extra Income

A great way to save for a down payment is to bring in extra income.  If you have a skill set that is in demand you could start a part-time business on the side.  You could get a second part-time job.  Anything that brings in extra income can go directly to your down payment fund.

Employer Programs

Some businesses, universities, and state and local governments have programs for employees that provide down-payment assistance.  Do not be afraid to ask your employer if they offer a program like this.  Just because it isn’t widely advertised does not mean it does not exist. 

Government Programs

Many state governments offer different grant and loan programs that can assist with a down payment.  The programs vary by state and change frequently but are definitely worth looking into.  Your real estate agent should be able to give you more specific information on any grants and/or loans your state may offer that you would qualify for.

Down Payment Savings Account

The best way to ensure you do not slip and spend money somewhere else that is meant to be put towards your down payment is to set-up a savings account designated solely to hold the money to put towards your down payment.  This will also make it easier for you to see where you are at in terms of your goal.