5 Easy Ways to Start Saving for a Down Payment on a Home

So you’re thinking about buying a home? Congratulations on moving forward with major milestone in your life. Now, the bad news: even if you have good enough credit to qualify for a mortgage, you’re still going to need a down payment for that home. Fortunately, there are some simple ways that you can save to buy your dream home.

Here are 5 easy ways to start saving for a down payment on a home.

1. Negotiate Your Rent

If you’re a great tenant, then it’s likely that your landlord wants you to hang around for as long as possible. To that end, he or she might be willing to work with you on the rent.

If you can save $50-$100 per month on your rent, it’s going to be a lot easier to raise the cash necessary for your down payment.

You might have to employ some old-school sales tactics, though. Tell your landlord what a good tenant you’ve been and how you always pay the rent on time. Brag about yourself for a little bit. If you know of any other tenants in your complex who were evicted and/or are trouble-makers, be sure to bring them up and mention that you’re not like them. Then, offer a soft close with something like: “Isn’t it worth $50 a month to keep a tenant like me around?”

However, it’s not a good idea to advertise the fact that you need a reduction in rent because you’re saving money for a down payment on a house.

2. Start Comparison Shopping

How much are you paying for car insurance? Do you know if you can get it for cheaper? If not, start shopping online right now for less expensive auto insurance policies.

Likewise, look at all of your major monthly expenses and see if you can reduce them by 20 percent to 30 percent. Those kinds of reductions add up to a nice monthly surplus that can be used to beef up your cash on hand for a down payment.

3. Use Your Tax Refund

If you’ve got a nice income tax refund from Uncle Sam, that can also help you out with a down payment.

Sometimes, taxpayers get surprised by how much money they’re owed by the IRS. It seems like an early Christmas present when they receive that fat refund check. If you find yourself in that position this year, put that money away towards a down payment on a house.

4. Save Your Bonus

If you get a bonus at work every year, save that money instead of spending it. That will give you yet another “surprise” amount of money that can be used towards your down payment.

5. Get Some Additional Income

A dream home is something worth working for. That’s why you might need to invest a little (or a lot) more of your time into a second job or some other means of securing additional income.

Consider looking for employment at retail stores at your local mall. They’ll usually need people who work after normal business hours and on weekends. That’s a great way to get some extra cash in the bank.

Keep in mind that, once you’ve followed these steps and saved your down payment, you’ll still have financial obligations associated with home ownership. Be sure to work with your agent to estimate a mortgage payment for the home you want to buy.