Are you dreaming of owning your own home in the future? If you’re planning on buying your first home and don’t have a lot of money already saved up, you’ll probably need to make a plan for gathering extra funds to make a down payment. While this may seem like a big task, it’s very doable—especially if you qualify for a loan that only requires a minimal amount down. In fact, you may even be able to accomplish your goal by this summer. Here’s how.
First, Figure Out How Much You’ll Need
The first step in saving for your down payment is knowing how much you need. This depends on the price of the home you think you’ll buy and the percentage you’re planning to put down. Here’s a breakdown:
- Closing Costs and Other Fees: In addition to the down payment, you’ll need to budget for closing costs, which typically range from 2%–5% of the purchase price. This could add another $5,500–$13,500 to your savings target.he housing industry and everyone starts looking again in the spring. That means you could score a good deal or get an offer accepted that normally wouldn’t be when there’s more competition.
- Home Price: The median home price in Omaha is currently hovering around $270,000. If you’re targeting a $270,000 home, a 20% down payment would be $54,000.
- Down Payment Percentage: While 20% is the standard down payment, programs like FHA loans, VA loans, and others offer down payments as low as 3%–5%. The lower your down payment, the higher your monthly mortgage payments will be, so take that into consideration when setting your goal.
Set a Savings Goal and Timeline
Once you know how much you need to save, break it down into a monthly savings goal. To reach your target by summer, you’ll need to create a realistic timeline and save consistently. For example, if you want to buy your first home by June and you start the first of December, you’ll need to divide the amount you need to save by six to determine your monthly goal.
If that feels daunting, don’t worry. It’s important to adjust your timeline or down payment goal if needed, but breaking it into manageable chunks helps keep you on track.
Ways to Increase Your Savings
If you want to reach your goal quickly, you’ll need to get creative about how you can cut costs and boost your savings. Here are some practical strategies to help you get there:
- Create a Strict Budget: Start by taking a hard look at your spending habits. Cut down on non-essential purchases like dining out, subscriptions, or impulse buys. Channel that extra cash into your down payment fund.
- Automate Your Savings: Set up automatic transfers from your checking account into a high-yield savings account or a dedicated down payment fund. Automating your savings will ensure that you don’t skip any months and stay on track.
- Increase Your Income: Consider side gigs or freelance work to boost your monthly savings. Whether it’s driving for a rideshare company, pet sitting, or doing freelance writing, extra income can make a big difference.
- Cut Back on Big Expenses: If you’re paying for an expensive apartment, car, or other major expenses, consider downsizing temporarily. If you can move to a more affordable living situation or sell your car and switch to public transportation, you could save a significant amount over the next few months.
- Sell Unwanted Items: Take inventory of what you no longer need and sell it. Whether it’s old furniture, electronics, or clothes, decluttering can bring in extra cash that can go directly into your savings fund.
- Use Windfalls Wisely: If you receive a tax refund, work bonus, or any other unexpected income, put it directly into your down payment savings. This can provide a substantial boost to your fund and make your goal more attainable.
Don’t Forget to Shop Around for the Best Mortgage Rates
As you’re saving for your down payment, don’t forget to start shopping around for mortgage options as well. Lenders offer different rates and terms, so it’s important to get pre-approved and compare offers from multiple banks or mortgage brokers. Having a pre-approval letter also shows sellers you’re serious about buying, giving you an edge in competitive housing markets. Need advice on where to get quotes? The helpful team at Trustworthy Title can give you some suggestions.
Stay Committed to Your Goal
Saving for a down payment on a house is a marathon, not a sprint. It requires discipline, focus, and sacrifice, but the reward of homeownership is worth it. Keep your eye on the prize, and remember that every dollar you save is one step closer to unlocking the door to your new home.
By starting now, sticking to a budget, and using some of these money-boosting strategies, you’ll be in a strong position to make your dream of homeownership a reality by summer. Stay focused, stay motivated, and start saving—your future home is waiting. If you have questions about what professionals to partner with when you’re ready to buy, the team at Trustworthy is always here to help.