June 19, 2017

Ready to buy your first home? Don’t be intimidated by the down payment. By using a few of these easy tricks, you can save all the money you need.

What is a down payment?

A down payment is a cash payment made upfront when you first buy a home. Even if you’re planning to get a mortgage loan, you’ll still need to pay some cash for the initial down payment.

How much money do I need for a down payment?

Most mortgage companies require an initial down payment of 3%-20% of the home’s total value. So if your home budget is $200,000, you’ll need $6,000-$40,000 for the down payment.

Fast, easy tricks for saving money

1. Create a separate account. Create a new account that is dedicated exclusively to saving money for your down payment—and don’t spend it on anything else.
2. Earn interest. If possible, try choosing a savings account, money market, or CD that generates interest on your down payment—earning you even more money.
3. Autodeposit a portion of your paycheck each week. Use autopay to directly deposit a portion of your paycheck into your dedicated savings account so you’re not tempted to spend it.  $100/week, $50/week, or even $25/week makes a difference!
4. Add it to your wedding registry. If wedding bells are in your future, ask for a down payment donation as a wedding gift.
5. Request donations for holiday and birthday gifts. If your family and friends enjoy giving gifts, why not ask for a gift to your down payment fund?
6. Take advantage of income tax refunds. Deposit any tax refunds into your new, dedicated savings account.
7. Use an app. New apps like Acorn can help you save for big goals by automatically investing your spare change—from your tablet or smartphone.
8. Start a “home saving jar.” Every little bit counts, including spare dollars and coins. Leave a coin jar on the kitchen counter, and empty out your change—plus any $1 (or even $5) bills—every night.

Don’t forget about other costs!

Remember, you’ll need some cash for other expenses when you buy your home. While you’re saving, it’s a good idea to plan a few extra dollars for:

• Closing fees
• Moving expenses
• New furniture
• Repairs (if needed)
• Utility deposits

HomeServices Lending can help you find a loan that meets your goals. Contact us today.