5 Simple Tips for Saving Up a Down-Payment


To many people, saving several thousands of dollars for a down-payment on a home can seem daunting, (maybe even impossible!) but with these few tips and some motivation, saving up for a down-payment is much more attainable than you think!

Create a realistic budget (and stick to it as best you can!)

No one likes to hear the word budget, but it is essential if you are looking to purchase a home. There are several budgeting strategies out there; it is just a matter of finding out which one is right for you! Here are a few of our favorite methods:

The 50 / 30 / 20 Rule
With this strategy, you delegate 50% of your take-home income to necessities, 30% for personal spending and 20% toward savings or paying down debts. (If you want to be more diligent about saving, you could flip the last two and delegate 20% for personal spending and 30% for your savings account.)

The Zero-Based Budget (ZBB)
With ZBB, you allocate every dollar toward a specific category each month. You can do this by identifying your priorities and expenses each month and categorizing them with a monthly budget. For example, you may allocate $1500 a month for living expenses, $400 for transportation and $300 for groceries. You can even add some categories that you know you’ll want to indulge in now and then, such as a $20 budget for an occasional morning coffee.

Envelope Budget
The Envelope Method is an old-school budgeting technique that relies on setting aside cash each month for certain expenses. Because cash is more tangible than a number on a screen, you are more likely to be aware of how much you are spending. This can help you stick to your budget and avoid overspending. However, we don’t recommend saving your down-payment in cash. Protect your savings allotment by putting it into a high yield savings account.

Cut unnecessary spending

Seek out creative ways to cut back on costs any way you can. Although cutting back a few dollars here and there doesn’t seem like much, it can add up quicker than you think! Here are a few examples of small costs that could lead to big savings:

  • Limit your streaming services down to one.
  • Avoid eating out and try cooking at home more often.
  • Skip the big vacation this year and try exploring somewhere new in your city.
  • Unsubscribe from emails or unfollow any shops that may tempt you to spend.
  • Downsize your apartment temporarily to save money on rent.

Paying off high-interest debt

If you have high-interest debts, such as credit cards, it may be in your best interest to pay those down as much as you can before saving for a down-payment. Paying down these debts will alleviate some of your monthly spending, improve your debt-to-income ratio (DTI) and may increase your credit score! With a higher credit score and a lower DTI, you’ll have a better shot at getting approved for a home loan.

Bring in extra income

Even with a budget in place, you might find that you’ll need additional income to meet your savings goals. Whether it’s a side hustle, negotiating a raise or reselling unused items in your home, making a little extra cash each month to put directly into your savings account is a great way to reach your goals.

Ask about first-time homebuyer programs

There are also several programs designed to help first-time homebuyers achieve homeownership. A few to consider are Fannie Mae and Freddie Mac’s down-payment assistance programs, VA loans and grants and FHA loans. Ask your Pulte Mortgage Loan Consultant if any of these programs would be right for you!

Remember, for most people, saving enough for a down-payment doesn’t happen overnight. Give yourself plenty of time and don’t be discouraged if it takes longer than you anticipate. Owning a home is a huge financial responsibility and you want to make sure you’re prepared every step of the way!

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