The Top Ways to Start Saving for Your Down Payment

Saving a large sum of money is no easy task. But it can be done! These five tips will help you put away money as wisely AND as quickly as possible.

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1. MAKE YOUR SAVINGS AUTOMATIC

First things first: If you don’t have a savings account, it’s time to set one up.

A great way to ensure that you’re contributing to this regularly is by telling your payroll department that you want a certain amount deducted from every paycheck and into this account via direct deposit. As long as you have a solid monthly budget, this deduction will be barely noticeable. Start small!

2. BUILD YOUR BUDGET

If you want to buy a home, it’s time to reel in your spending with a monthly budget.

Creating that budget is the easy part; it’s sticking to it that can get tricky. Be honest about your savings goals and spending habits to make sure your budget is as realistic as possible. Create a list of monthly expenses and note when things are paid off. If you’re more digitally minded, download one of the countless apps that make budgeting easy.

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3. SAVE ALL WINDFALLS

When that magical time of year comes for your bonus or tax return, it can feel like free money.

It’s going to be tempting to splurge (understandably so), but saving it will help in your pursuit of a new home. Plus, if you did a good job of setting up your budget, you won’t “need” this money anyway. Cash reserves like these will help get your down payment savings off the ground.

4. PUT AWAY LESS FOR RETIREMENT

Consider saving less for retirement if you have a matching 401(k) plan during the time you’re saving for your down payment.

Your employer-sponsored contributions typically stop at 6%, so capping your own contributions there and putting remaining funds toward your future home may make sense.

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5. TRY DOWNSIZING

Take a look at your spending habits.

Where are you spending too much? Where can you save? Consider the cars you drive, where you’re currently living, and the size of your property. Look at vacations, hobbies, recreation, and dining expenses. This will allow you to reach your homeownership goals quicker.

Remember to maintain peace of mind.

Don’t punish yourself! It’s all about saving where you can in order to reach your end goal: a place you can call home.

ditech is not a financial advisor and the steps outlined above are for informational purposes only. They are not intended as investment or financial advice and should not be construed as such. Consult a financial advisor before making decisions regarding important personal financial matters.

Ready to take the next step toward buying? A ditech Home Loan Specialist can help you determine the right mortgage and down payment to put you on the right path. Find a Home Loan Specialist now.