Saving for a down payment is difficult and time consuming. Depending on the type of mortgage you're planning to apply for, you may be required to put as much as 20% down (That's $40,000 if you're purchasing a $200,000 home!). Don't be discouraged if you are just starting out -- our 8 suggestions will get you on the right track toward saving.
1. Reduce Your Living Expenses. Cut costs in any way you can -- eat at home instead of dining out, buy generic brands instead of pricier name brand versions and brew your coffee at home instead of stopping on your way to work. Cutting just $5 per week in unnecessary costs adds up to $260 in a year and you'll be pressed to notice any difference.
2. Open A Special Savings Account. Put your down payment money into a new bank account or CD where it will be earning interest without tempting you to dip into it. Consider depositing a set portion of each paycheck into the account to accelerate savings.
3. Look for Assistance Programs. There are state and federal assistance programs available to help people buy homes. Visit the U.S. Department of Housing and Urban Development (HUD) website for more information and to find a housing counselor to advise you.
4. Stow Away The Credit Card. Or, better yet, get rid of it all together. Not only will you avoid making unnecessary purchases by committing to a cash only lifestyle, you'll also prevent increasing your debt-to-income ratio which lenders will scrutinize.
5. Take On A Roommate. The money you will save by splitting the rent will add up very quickly.
6. Look For Deals. Use coupons at the grocery store and use sites like Retail Me Not or Deal Catcher to find online coupon/promotional codes for web purchases. Your savings may seem small, but every little bit helps pad that down payment account.
7. Supplement Your Income. If you are able to take on an extra job to help you save, consider doing so. Keep in mind that the busy schedule will only be temporary, and while not ideal, your goals will be met much sooner.
8. Accept Help When Offered. If your family is willing to help you with your down payment accept the assistance. You are able to accept up to $13,000 in tax free gifts annually. See the IRS website for more information.