Although there are mortgages that don’t require a down payment, most people qualifying for a home loan will need to make a down payment that typically ranges from 3.5% to 20%.
As a result, borrowers need to save for a down payment, in addition to other savings.
Here are 5 tips that have helped people tighten their budget to save for a down payment on a home while continuing to save for all the other things in life.
#1 Determine How Much to Save for a Down Payment
While many banks have conventional loans with down payments as low as 3%, it is important to know what you qualify for to help determine how much of a down payment you need.
There are government-backed loans such as FHA that allow as low as 3.5% down payment and VA and USDA loans, which require no down payment at all.
Meeting with a mortgage lender to determine what loans you qualify for, how much of a home you can afford, and how much of a down payment you need will help you to determine how much you need to save.
#2 Cut Back Spending in Other Areas
Simple things such as saving spare change or setting up automatic transfers from your checking to your savings account are beneficial.
Saving employee raises and bonuses, using cash rewards credit cards, and refinancing student or auto loans are other ways to save for a down payment.
#3 Get Creative with Your Income
Consider spending a few hours on the weekends or after your day job having a side gig to help increase your income.
Dog walking, waiting tables, or selling handmade crafts online are ideas to help with saving for a down payment. Freelancing opportunities have greatly increased over the years making it easy to earn extra cash.
#4 Limit Credit Card Usage
For many consumers, credit cards are one of the easiest ways to fall into debt.
Try to live within a reasonable budget and have an emergency fund so credit cards are rarely needed. Then, save for a down payment on a home in addition to everything else.
#5 Reevaluate Current Bills
Did you notice and bills that seem higher than they should be? If you are making unnecessarily high payments, it could be beneficial to shop around and see if you can find lower rates, without losing the services you enjoy.
Bills such as a gym membership or the highest cable package are great examples of bills you can cut out of your monthly spending.
Marimark Mortgage
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in mortgages for first-time homebuyers, conventional home mortgages, refinance loans, reverse mortgages, and FHA, VA, and USDA mortgage options. In addition, we’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.
To get started with a mortgage to buy your next home, please fill out our Quick Mortgage Application or contact us.
The Marimark Mortgage Newsletter will keep you informed with important events in the mortgage industry that could impact your finances.
We especially focus on ways to save money on your current and future mortgages. And, we continually share the information we share with our clients, because we believe informed consumers are the best consumers.
Real estate agents, and other professionals in the industry, will receive an ongoing wealth of information that will help them serve their clients.
