There are a number of Down Payment Assistance Programs available to homebuyers. Learn about them here.
How to save for a down payment on a new house: Tips
Determine how much you can afford
Review your current debt, average current mortgage interest rates, and your household’s potential earnings power.
Set a down payment percentage
Not all home need a 20% down payment for purchase. The exact percentage depends on your lender and credit. Aim to save as much as you can for the down payment and ask your realtor to look for homes on the lower end of your range.
Determine how long you have to save for a down payment
Do you intend to purchase a home in 6 months, or a year, or 5 years? This timeline helps guide what kind of account to hold that savings so that it will grow and be accessible when you are ready for it.
Set your savings strategy
Your timeline will determine the best savings strategy including how much to set aside each month. Do what is referred to as back-of-the-envelope math. Don’t forget to account for your existing savings that is earmarked for a down payment as well.
Take stock of your resources
Do you have any family or friends that are willing to help you with the down payment. Stats show that 20% or more of millennials (between ages 24 and 32) get down payment funds this way. Or can you take an early withdrawal from your IRA for a first-time home purchase without a penalty?
Audit your financial life
Be ruthless with all of your financial picture. Take all of your statements (credit card, bank accounts, student loans, etc), and review the amount that you are earning vs.How to save for a down payment on a new house the amount that you are spending. Review the amount that you are current saving and adjust all three figures to intential pivot towards this goal.
Determine ways that you can save more
After you’ve completed the above steps, go searching online for tips and tricks on how to avoid overspending, saving on groceries and gas, and how to spend less on online purchases.
For assistance on all of these steps, contact a financial professional.
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