home buying

How to Save for a Down Payment While Renting

5 Minute Read

Tired of renting? We get it. The pressure to buy a home right now is real.

If you’re like most renters, money’s 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. 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!

But you want your home to be a blessing, not a curse, right? Well, we’ve got a simple plan to help you out. Not only can you reach your savings goal, but we also think you can do it in 18 months or less!

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.

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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). Be sure to stick with a 15-year fixed-rate mortgage that’s no more than 25% of your monthly take-home pay. Your real estate pro can tell you if your home budget is realistic for your area.

So let’s say you decide to save $25,000 to cover your down payment, plus closing costs and other moving expenses. 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, it’s time to 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 over $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:

 

  • 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 saving thousands toward 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 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.

Get in touch with a real estate pro today!

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