The costliest part of home buying is the amount you have to save for a down payment. Since the minimum down payment will have to be at least 3.5% of the purchase price, you need to start saving money well ahead of your projected home-buying time. These tips should help you build your down payment kitty.
- Since down payment amounts are usually a percentage of the purchase price, establish a savings goal based on the price range of the kind of house you can afford. A home affordability calculator will help you determine your target price point.
- Open a savings account to accumulate funds designated towards a down payment. A separate bank account will be less tempting for you to tap into for other purchases.
- Have a budget based on your monthly income and expenses so you can determine the amount that you can comfortably put into your savings account.
- Pay down your debt so those funds are free to become part of your monthly savings contributions. Try negotiating with your utility providers to reduce your monthly usage and costs. Apply those saved expenses to your down payment account.
- Look at your budget and find where you can cut back on everyday spending, such as food, entertainment or travel. Suspend setting aside funds for travel until after you buy a home. Redirect your cut-back dollars to your savings.
- When you can't reduce any more of your spending, consider increasing your income by getting a small side job. Apply those earnings to your down payment fund.
Call or email to make an appointment with me so I can help determine what price range of home you qualify for and where you can make improvements and changes in your budget so you can start building up your down payment.