39% of First-Time Home Buyers Struggled to Come Up With a Down Payment. 3 Ways to Scrounge Up More Money for Yours
by Maurie Backman | Published on Nov. 7, 2021
Having a hard time saving for a home? Here are some strategies to try.
- A recent survey reveals that almost 40% of first-time buyers had a hard time saving for a home.
- Getting a second job, stashing away bonus cash, and rethinking your budget could be your ticket to accumulating that down payment.
Saving up enough to buy a home is no easy feat -- especially in today's housing market where home prices are so inflated. In a recent Opendoor survey, 39% of first-time home buyers said they had a difficult time coming up with the money for a down payment. If you're in the same situation, here are some strategies that might help.
1. Get a side hustle
Your regular paycheck may largely be monopolized by ongoing bills, making it difficult to carve out room to save for a down payment. But if you get a side hustle on top of your main job, that money won't be earmarked for anything specific. So you should be able to stick all of it (minus what you owe in taxes) into the bank.
If you're worried that a side job will monopolize too much of your time, fear not. There are many gigs to choose from, and if you're pressed for time, you can probably find one that doesn't require a tremendous commitment, like driving for a ride-hailing company.
That said, the more time you're willing and able to put in, the faster you might reach your down payment goal. So if you can push yourself to put in more hours in the near term, you might manage to buy a home sooner.
2. Bank your bonus cash
Chances are decent that you might come into some extra money during the year. Maybe it's a tax refund or a bonus at work. You might even snag extra cash back from your credit cards or get a sign-up bonus when you apply for a new one. All of that extra money could help you get closer to meeting your down payment target.
3. Cut back on leisure spending
It's unreasonable to never spend money on leisure or fun things. But if you're really trying to finish saving for a home and you're not quite there, it could be worth it to sacrifice leisure for a few months.
Take a look at your budget and identify the expenses that technically aren't necessities for most people. These include things like takeout meals, cable, and other types of entertainment. If you're able to cut back on some of those expenses temporarily, it could go a long way toward helping you buy a home.
Saving for a home can be challenging, but the more money you can bring to the table, the less of a mortgage you'll need to take out. And also, if you're getting a conventional mortgage, making a 20% down payment will help you avoid private mortgage insurance, a costly premium that makes homeownership more expensive.
That said, if you're really struggling to save up that down payment, it may be time to consider a home loan that's more flexible in that regard. FHA loans, for example, allow you to put down as little as 3.5% of your home's purchase price, and while they do have some drawbacks, they're worth considering if you really don't want to wait any longer to buy.
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