6 Minute Read
Tired of renting? We get it. The pressure to buy a home right now is real, especially as rent prices continue to rise.
Using Census data from 1960 to 2014, Apartment List found that inflation-adjusted rents have risen by 64% during those years while incomes only increased by 18%.(1) As your rent payment gets higher, it’s even harder to save up money for your future home.
And you’re not alone. If you’re like most renters, money is the top reason you haven’t bought a home yet. In fact, Builder Online estimates that it would take young Americans over seven years to save up a 10% down payment.(2) No wonder so many first-time home buyers go with “creative financing” options that allow a small down payment but cripple their ability to build wealth!
There are so many reasons to be excited about homeownership—you own an investment instead of paying your landlord every month, plus you get a place that’s truly your own! But if you want your home to be a blessing and not a curse, it’s important to start off on a solid financial ground. That’s why Dave recommends putting down at least 10%.
But how can you save up a big down payment while rent is eating up more of your paycheck? Well, we’ve got a simple plan to help you out. Not only can you reach your savings goal, but, with the help of our tools, we believe you can also do it in less time than you think!
Local experts you can trust.Find an ELP
Related: Want to learn more about how to save up a down payment on a house fast? Our 5-Day Home Buyer Savings Plan will help you discover simple tricks to save a five-figure down payment by this time next year!
Start With a Clear Savings Goal
Before you start saving, it’s important to know what you’re working toward. So what’s a good down payment? Dave’s a fan of putting 100% down on a home, but that’s not feasible for everyone.
If you can’t pay cash for your home, plan to put at least 10% down, though 20% is even better because you’ll avoid private mortgage insurance (PMI). Here’s a tip on how to buy a house you can afford: Stick with a 15-year fixed-rate mortgage that’s no more than 25% of your monthly take-home pay .
Wondering how you’ll find a home you love in your budget? Your real estate Endorsed Local Provider (ELP) can help you target your home search based on your price range.
So, let’s say you have 18 months before you want to purchase a home, and you decide to save $25,000 to cover your down payment plus closing costs and other moving expenses. Now you’re ready to get started! Here’s how to find that kind of cash and fast-track your savings!
Tip #1: Trim Expenses | Save up to $11,000
Let’s start with the money you’re already bringing in every month. That’s right, let’s flex your budgeting muscles!
You’ll be amazed at how much money you find just because you’re paying attention to your spending. Here are some ideas to help you tighten your spending temporarily while you work on piling up cash for your new home:
- Take a break from the gym: $60 per month
- Save eating out for special occasions: $250 per month
- Trim your clothing budget: $100 per month
- Buy generic brands at the grocery store: $160 per month
- Cut the cable: $60 per month
These tips could save you $630 every month! That adds up to more than $11,000 over the course of 18 months. You can always get creative and find even more ways to save!
Tip #2: Hustle Like You Mean It | Save up to $9,000
If you’re looking for another way to turbocharge your income, there’s nothing like picking up a side gig or a second job!
The best thing about getting a side job is that you can usually find something that you already enjoy doing. Here are some ideas to get you started:
You May Also Like
- Exercise regularly? Walk neighborhood dogs after work or referee sports leagues on the weekend. Get healthy and bring in some dough? That’s a win!
- Have a heart for teaching? You can expect to make $13–20 an hour tutoring—even more if you live in a big city or have advanced degrees.
- Love pets? Let your friends and coworkers know you’re available to watch Rover the next time they’re out of town.
So, is it worth it? Say you work 16 hours per week making $10 per hour. That’s an extra $120 per week after taxes. Keep that up and you’ll have more than $9,000 to add to your down payment savings in 18 months.
Tip #3: Skip Splurges or Sell Stuff | Save up to $5,000
Think twice about your “extras” this year and you can reach your goal even faster! Here are a few ideas to get you started:
- Say no to this year’s getaway so that you can say yes to your perfect home instead! You could pocket $3,000 from that alone.
- Have stuff you can sell? Take advantage of online sites or even an old-fashioned garage sale to bring in some extra dough. Scoring $500 from a Saturday morning garage sale? That’s a win in our book.
- Get an annual bonus or raise? Stash it in savings instead of blowing it on a big TV this year. That could be an easy $1,500 bump!
Try these tips and you’ll be well on your way to reaching your down payment goal!
Make the Most of the Money You Save
When you’ve worked so hard to save up a big down payment, the last thing you want to do is make a bad financial investment. That’s why it’s so important to work with an experienced real estate pro who has your best interest at heart.
Our ELPs help first-time home buyers like you all the time. Here’s what Angela had to say about her son’s experience working with one of our real estate ELPs:
“I was looking for a reputable real estate agent to work with my son—a first-time home buyer who lives out of town. From start to finish, your ELP made sure his interests were well represented. She contacted and met with contractors to secure bids and even negotiated a new roof.”
Our real estate ELPs are the best in the business, with top-notch customer service and years of experience in your local real estate market. When it comes to your biggest financial investment, don’t leave it in the hands of an amateur. Work with one of our real estate pros. We make it easy to find the right agent for you in your local market.