6 Tips for Saving for Your Down Payment

Monday, April 06 at 11:20 AM
Category: Personal Finance

Before you can make the transition from renting your home to owning your home, you will need to have a substantial down payment, typically 5 to 20 percent of the home’s value. The American Bankers Association suggests the following tips to help save for it:

  1. Develop a budget and timeline. Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month – that will help you gauge when you’ll be ready to transition from renter to homeowner.  
  2. Establish a separate savings account. Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.   
  3. Shop around to reduce major monthly expenses. It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts. 
  4. Monitor your spending. With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g., nice meals out, vacations, etc.) and instead put that money into savings. 
  5. Look into state and local home-buying programs. Many states, counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants. 
  6. Celebrate savings milestones. Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process. 
Learn More
Wondering what to keep in mind for you house hunt? Check out our Pinterest board for home buying tips.* As you arm yourself with information, you’ll be better prepared to make a housing decision that serves your needs.

Information courtesy of American Bankers Association.*

Links marked with * go to a third-party site not operated or endorsed by Arvest Bank, an FDIC-insured institution.


Blog edited by Blog Admin 6/1/2015.

Tags: Financial Education, Home Loans, Mortgage
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