In order make a down payment (a percent of the total loan you’ll take out to buy the house), you’ll need to take inventory of your savings, rework your budget and likely make some changes to your lifestyle. But it’s all in the name of seeing your name on a deed and owning a piece of real estate.
Once you’ve figured out how much you can afford for a house and what you’ll be putting down in a deposit, it’s time to start saving for that down payment so you can make the dream of homeownership a reality. Here are some strategies:
- Transfer savings into a separate account, so you’re not tempted to spend it.
- Cut expenses—more modest vacation, fewer meals out.
- Pay off high-interest debt—this will also improve your credit score.
- Ask relatives for help, but be sure to clarify whether the help is a gift or loan.
- Put any extra money toward the down payment—Bonus? Rebate? Cash gift?
- Ask for a raise. Put the extra money in that special account.
- Sell stuff. Put the receipts in your separate account.
- Tap into retirement funds. First time buyers can make specified withdrawals from IRA’s.
Each step you take brings you closer to that goal of owning your own home.