Are you worried that you don’t have enough money to put down on a home? Do you feel like you’ll be stuck renting forever?
We know it can feel that way, but we have great news. First, you don’t need a large down payment in most cases. You can get away with as little as a 3.5% down payment on an FHA loan or 3-5% on a conventional loan. That’s just a fraction of the typical out of pocket cost to buy a home.
But even 5% of a $200,000 home is $10,000. What if you don’t have that right now? Here are some creative ways to come up with it.
Coming up with a Down Payment
- Create a budget – We know no one loves budgeting, but if it gets you on track to save for a home, it’s worth it, right? Figure out how much you need to save each month to reach your down payment goal. Budget that amount for the month and make sure you stick to it.
- Start a side gig – Are you crafty or have a skill you could offer on the side? There are hundreds of freelance opportunities online for people that write, create websites, excel at marketing, or do graphic design. Start a gig just to save for your down payment
- Cut your expenses – You may spend more than you realize. Take a close look at your bank statements over the last few months. Do you see any areas you could cut back? You could cut out subscriptions and memberships, reduce your spending on shopping, or use coupons when you grocery shop. Any money you save put aside for your down payment.
- Invest your money – Investing is scary, especially when you have a goal for the money, but it can also make it grow faster. Find investments with a risk tolerance that you can handle and enjoy the earnings. It will bring you that much closer to your desired down payment in exchange for a little risk.
- Get a second job – If you have time at night or on the weekends, take on a second job just for your down payment. Put everything you make toward the down payment and you’ll be able to stop working the second job quickly.
- Borrow from your IRA – If you have an IRA and you’re a first-time homebuyer, you may withdraw up to $10,000 from your account. You’ll pay taxes on the money, but there’s no penalty as loans you use the funds for your down payment.
Saving for a down payment doesn’t have to be as overwhelming as it sounds. When you look at it as a percentage, it sounds like a lot. If you break it down into achievable goals and set a timeline, though, you’ll find that you can achieve your down payment goals a lot faster than you thought. You may be able to become a homeowner a lot faster than you thought possible.
Would you like to hear more about the low down payment programs that may be available to you? Call us today and let us help you learn more.
