Down Payment Savings Strategies: 15 Proven Methods for Homebuyers

Whether you’re looking to buy your first home or your fifth, putting money down upfront will reduce your monthly mortgage payment, total interest charges, and perhaps even the loan’s interest rate.

If you currently own a home, you may have an easier time because you can use the equity you’ve gained in the property. But if you’re a first-time homebuyer, you’ll need to come up with the cash in another way. Here are some money moves you can make to set more aside for your home purchase.

15 ways to come up with a down payment for a house

Know how much you need

Before you start taking any other steps, it’s critical to calculate how much you’ll need to put down. Get prequalified for a mortgage loan to find out how much you qualify for, and also consider your budget to determine what you can afford to pay each month.

With this information, you’ll be able to get a basic idea of what you can afford in terms of sales price, then calculate your minimum down payment based on that figure.

For example, if you’re buying a $200,000 home and getting a Federal Housing Administration (FHA) loan, which requires a down payment of 3.5% or more, you’ll need to save at least $7,000 in addition to your closing costs. If you want the same home but with a conventional loan, you may be able to get by with a $6,000 down payment (3% of the total).

Most conventional loans require you to put down at least 3% of the home’s purchase price — and that’s in addition to closing costs. Just keep in mind that some lenders may require a higher down payment, especially if you have a larger loan or your credit history is less than stellar. Speak with a mortgage lender before you start saving to make sure you choose the right target.

Come up with a savings strategy

There are many different ways to save for a down payment, but it’s important to focus on the ones that work best for you. Some may have more room in their budget for regular saving than others, and you might have more or less time than your peers for extra money-making endeavors.

Regardless of how you plan to save, write it out from the beginning, so you can be more effective with your efforts. It’s also important to communicate about your strategy with a spouse or partner who’s purchasing the home with you.

Cut your bills

If you’ve had a subscription or membership for a long time, it can be difficult to drop it, even if you don’t use it regularly. However, permanently cutting one or more recurring charges from your budget will allow you to redirect that cash flow toward your down payment fund.

If you’re not sure where to start, an app like Truebill can help. The service will cancel subscriptions you no longer use and can even help you negotiate lower rates on cable, phone, and internet bills.