3 Ways to Save Up for a Home by the End of the Year
by Maurie Backman | Published on Oct. 21, 2021
With these moves, you just might have that down payment available before 2021 comes to a close.
Though some mortgage lenders are more flexible than others when it comes to a down payment, there's a minimum amount you'll usually need to put down to qualify for a mortgage. That amount depends on the type of mortgage you take out. With a conventional loan, you may need to come up with 10%. For an FHA loan, you can put down as little as 3.5% of your home's purchase price at closing.
But unless you happen to qualify for a special loan program that doesn't require a down payment at all, like the VA loan program, you'll have to bring some money to the table to buy a home. If you're on your way to that down payment but still have some work to do, these moves could be your ticket to meeting your savings goal by the end of the year.
1. Pick up a side job
The great thing about getting a side hustle is that the money it pays you won't be earmarked for existing bills. And that means you might be able to sock all of it away toward a down payment (minus what you need to pay in taxes).
Plus, the more hours you can put in, the more likely you'll be to hit your savings target. And while pushing yourself to work more won't be easy, remember that you're talking about hustling for a couple of months to meet a specific objective -- being able to qualify for a mortgage and buy a place of your own before 2021 wraps up.
2. Cut back on spending in a serious way
You'll often hear that small spending changes can make a big difference over time. Well, if your goal is to save up for a home by the end of the year, then you don't have a lot of time. So you may need to seriously slash your spending on a temporary basis to meet your goal. That could mean not dining out at all, skimping on holiday plans, and canceling nonessential services like cable.
Is that an extreme way to live? Yes. But we're not talking about living like that forever. Rather, if you make the sacrifice for a couple of months, you could save up enough cash to buy the kind of home you're hoping for before the year ends.
3. Bank your bonus
Some people are entitled to a bonus from work at the end of the year. And as nice as it might be to spend yours on a vacation, if you're aiming to buy a home this year, you're better off sticking that entire windfall in the bank. A generous bonus could help you come up with the down payment you need to finally become a homeowner.
Saving up for a down payment isn't easy. If you're on your way but still need to bank more money, these moves could be your ticket to buying a home before 2021 comes to an end. And even if you don't manage to get an offer on a home accepted this year, it'll be nice to start 2022 knowing you're in a solid position to buy a place of your own once the right one hits your radar.
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