How To Save For a Down Payment on a House
How To Save For a Down Payment
Many people might think that saving for a down payment is impossible. Depending on the price of the home and how much money you want to put down, a down payment can be a sizable amount of money! Take a look at these tips and tricks to help you learn how to save for a down payment
Determine Your Budget
The first step toward saving is to realize how much money you are spending. If you spend all of your income every month and have little left to save, putting any money toward a down payment fund can seem out of reach.
The best way to determine your budget is to begin writing down every single thing you spend on. Then, at the end of the month, you can categorize your spending and figure out where to cut back.
Additionally, you can determine how much you plan to spend on a monthly payment for a mortgage on your new home and begin to save the money that you would be putting toward that higher mortgage payment. Then, not only are you saving money, but you’re already preparing yourself for your new mortgage payment!
Pay Down Your Debt
While it might seem counterintuitive to spend money paying off a debt while trying to save for a mortgage, it will actually benefit you in the long run. The lower your debt to income ratio, the higher the mortgage amount you will qualify for.
Consider A Side Hustle
If you determine that you simply need a higher income to be able to afford a mortgage payment, you can consider picking up a side hustle. Try brainstorming your hobbies and talents to determine what side hustle suits you best.
How Much Do You Need To Save?
Many people think that you need to save 20% of your potential new home’s price for a down payment. However, there are several different types of loans that require you to put less money down.
An FHA loan requires you to put down 3.5% at minimum, and a VA loan might even qualify you for a 0% down payment. However, putting down 20% will help you avoid paying PMI, or private mortgage insurance.
Conclusion
There are many strategies that can help you save for a down payment. Which one is right for you?
