If you have been considering purchasing a home, you know that it can be expensive. A buyer has to come up with a down payment. Mortgage lenders typically want anywhere from 3-20% down , or more, depending on the type of loan. On a $200,000 mortgage, that would mean you would need to come up with anywhere from $6,000-$40,000 for a down payment. Many people may wonder how they could possibly come up with enough money to make a down payment. While it is a significant amount of money, do not let a down payment deter you from pursuing the dream of owning a home.
There are many practical, easy ways to save for a down payment. Begin by determining how much you need to save and use your future home as your motivation. Having a plan and a goal in mind will help you stay focused. Start with your existing savings. Do you have money just sitting in your regular checking or savings account? Consider a money market savings account or a CD to help you grow your savings more quickly. Shop around to reduce your monthly expenses. Many people have car payments, insurance payments, cable payments, cell phone payments, internet payments and more. Shop around to see if another provider may offer lower rates or payments. This can save you money each month and will quickly add up. Also, with your goal in mind, consider if you can cut back in any areas. Can you go without cable for a while to put that money towards owning a home? Do you have a motorcycle sitting in the garage, collecting dust? Consider selling miscellaneous assets that you do not need and putting that money toward owning a home. Re-evaluate your current living arrangements. Perhaps you can negotiate your rent for a lower monthly payment? Or, if you have relatives that live nearby, you may be able to live with them for a period of time and put the money you save toward your down payment.
While it may not sound ideal to move in with family, it is for a short period of time and can help you get into a home more quickly. Depending on your schedule, you may also consider a second job or part time job on the side. With additional income each month, your savings will grow rapidly. Lastly, research government programs. The government often offers incentives to encourage home ownership. Government programs change frequently so continue to look into the variety of options every so often. With some dedication and focus, you can save for a down payment and experience the joy of home ownership.