Buying a home can require a healthy amount of savings. The general rule of thumb is to save up 20% of a home’s purchase price for a down payment. And with the average home price in the US hovering at $453,700, a 20% down payment will set you back about $90,000.
And that’s not the only thing to save for; there are also property taxes, closing costs, and ongoing repairs and maintenance. That’s a lot of expenses to cover—and it might take a few years to save up before you can buy your dream home. But fret not, as there are a few ways to speed it up. In this post, we’ll show you some easy and painless ways to save up for a house. Let’s dive in!
1. Invest Your Windfalls
If you get a tax refund, stimulus check, holiday bonus, check from grandpa, or some other unexpected sum of money, don’t splurge. Instead, send them straight to your house fund account. It’s advisable to put the cash in a home fund account that earns interest so your money can grow with time. Also, it can be tempting to withdraw the funds, so put the money in an account that automatically restricts access.
2. Take Advantage of Home Buyer Programs
The government wants people to own homes. To spur homeownership, state and federal governments offer home buying assistance programs. In addition, there exist a great number of programs and incentives aimed at helping consumers or potential homebuyers based on their location, whether or not they qualify as VA, or if they belong to certain professions (like first-responders, teachers etc).
You can visit your State Housing Finance Agency’s website to find out about the home buying programs available in your state. Better yet, contact your local DRMC branch for a full investigation of what programs or incentives you may qualify for.
3. Get a Side Hustle
In the ever-growing “gig economy,” it’s easier to earn passive income on your own with a lucrative side hustle. Here are some ideas to get you started.
- Help people move
- Take online surveys
- Start a blog
- Tutor over Skype
- Test apps and websites
- Manage social media for small businesses
- Write an e-book
Thanks to technology, there’s an increasing demand for freelance opportunities that require little to no qualifications to get started. These side gigs can give you extra cash to put towards your down payment.
4. Pay Off Your Debts
Carrying a lot of debts can put a strain on your saving potential since a chunk of your income goes towards repayment. That debt load can also make it difficult for you to secure a mortgage. If you have high-interest credit card debt or student loans, pay it off as much as you can. Paying off these debts before you start saving is a great first step in your house buying journey.
5. Take Every Opportunity To Save
Take a look at your lifestyle and look for opportunities to save. Whether it means eating out less often, moving back in with your parents, or sharing rent with roomates, or selling items you no longer use.
If you have more than one vehicle, consider selling one. You can look at walking, taking public transport (80% cheaper than owning a car), or cycling (good for your health). By selling one vehicle, you can save on insurance, gas, and maintenance. These cost savings can add up to $10,000 per year.
7. Crowdfund Your Down Payment
It's a brave new world! Today, many homebuyers are funding their down payments through crowdsourcing websites. You can do it too. Platforms like HomeFundIt have become very popular and are dedicated to helping aspiring home buyers crowdfund a down payment. You could even have your friends and family contribute to your down payment.
Wrapping Up
Saving enough down payment for your first home can be a daunting and lengthy process. But with the right strategies and diligent action, the process might not be as long as you think. As you implement the steps above, you’ll soon be on your way to buying your dream home. For expert assistance, please contact your local DRMC branch.
