How to Save for a Down Payment in 6 Months
January 29, 2019 |
So — you want to buy a house.
The housing market is always a little crazy, and once you decide it’s the right time to buy your first home, you have to be ready to jump on the perfect property in a heartbeat. So, you need to make sure you have your down payment ready to go as soon as you start looking. Sounds reasonable, but if you want to buy a house soon, how can you save enough for a down payment quickly?
We’ve pulled together five easy steps to help you save for a down payment in as little as just six months. If you’re ready to buy, here are your first steps:
1. Determine how much you want to save.
The typical down payment for a house is 20% of the cost of the house. That means, if you want to purchase a $200,000 house, you’ll need $40,000 for a down payment. Do some research and determine what house price is right for you, and that will give you a clear amount to save for the down payment.
You can also use a mortgage calculator to get a rough estimate about how much per month you can expect to pay at any house price, given a 20% down payment and various interest rates. This will also help you get a good feel for what house price you can afford.
2. Establish a budget or reevaluate your existing budget.
This will help you determine how much you can save based on your current income. If you don’t have a budget already, use any of the several helpful budgeting tools and apps available online. Determine how much money you need to spend each month on necessities (rent, utilities, bills, groceries) and how much you can limit yourself to on the extras (entertainment, travel, online shopping, etc.) Whatever is left over from your income can go towards your down payment.
If you already have a budget, and one that you stick to consistently, take a hard look at it and see if there are any adjustments you can make. Do you have any debt (like credit cards), which you can pay off early? If you do, pay them down so you can use that money towards your new home’s down payment. Are there any extras that you can cut from your monthly spending? Maybe use your streaming media or on demand account more than going to the movies every week? You’ll be surprised at how quickly these little cuts could add up to big savings.
3. Sell what you can.
Do you have a vintage doll set you would consider selling to buy your dream house? Or a collection of rare records? A car you inherited and never use? Savings bonds you got for your birthday from a grandparent? These are just some of the ways you can sell idle items to help fund your down payment. It might be worth considering this approach to help you reach your goal faster.
If you have a 401K account, you can use some of those funds for the down payment on your first home (read your plan’s details with respect to loans). This is another option to consider toward helping you reach your goal (but make sure you also keep a solid retirement fund growing to help you later — Dime can help with that).
4. Find other streams for earning money.
There are countless ways to earn extra money nowadays. If you have a vehicle, you could drive for Uber or Lyft, deliver food with UberEats or Postmates. You can also pursue teaching courses online on topics you’re passionate about. Another possibility, is to take surveys online for cash or gift cards (to offset some of your other spending).
Another great way to supplement your income is through part-time freelance jobs, which you can do online at your own pace. Sites like Fivver and Elance are great for finding jobs and building a reputation.
5. Build your savings in a high-yield account.
Six months might not be the longest time to earn money on your savings with a high-yield account, but it’s another way to help increase your funds with very little work.
- Dime’s 2.55% 14-Month No Penalty CD is a great way to help you increase your savings while you continue to build your down payment.
- Dime’s Money Market Account is a great way to help you build your savings and down payment while remaining liquid.
Saving for a down payment in just six months is ambitious, but not impossible. It requires some sacrifice, and you have to push yourself to succeed, but if you stick to it, you can be a homeowner faster than you’d ever expect. And Dime is here to help.
Once you have your down payment and are looking to finance your new home purchase, speak to a Dime Mortgage Loan Officer, who will help guide you from application to closing. And, we’ll also help you get off to the right start with a $500 credit toward closing costs1.