How do I save money for a down payment on my first home?

Question

I am 26 yrs old and want to buy my first home by the time I'm 30. I would like to have about $20,000 to put down on my home. What is the best way to do this? I am currently making about $38,000 per year.

Answer 1

With the market as slow as it is you can get most sellers to carry your closing costs and get 100% financing. If you have a credit score above 580 you may qualify. Save your money for move in expenses and having that money in reserve will also help get you qualified at a better rate. Check the link below and see if you can pre-qualify.

PS, $20,000 is nothing substantial to put down on a home, it's a mere 5% on a 400,000 home, you would still need a 80-15-5 loan to avoid PMI so better you buy now in a buyers market and in 4 years you will be in a position of equity. (No matter what you read in the news or hear on TV)

Answer 2

Live below your means as much as possible. Sacrifice in the short term to gain the down payment monies, cutting everywhere you can. Usually people spend more on a house payment than on rent, when you add in the taxes and insurance costs, so pay what you would normally pay in rent and the remainder of what your mortgage would be into a specially designated savings account (high interest). Make sure your budget matches what you feel you want to put down.

But, always remember to keep up and build up your credit scores, which can reduce what amount you actually need as a down payment. More and more buyers are going zero down these days

Answer 3

Adjust your lifestyle---eat good but cheap. Drive less, get a parttime job or do some lawnmowing for money to live on. Do you party too much---Are you sure you can really afford a house--taxes, insurance, mortgage, repairs---it goes on and on. Look for a smaller starter home, or a fixer upper. How about the tax lien houses? Add up your daily needs for money. Can a parttime job give you some extra help? maybe you can live off the parttime money and save your big paycheck. You need to be disciplined with your life and expenditures. No homeowners go out, no movies, no big restaurants, lots of salads and peanut butter sandwiches. If you marry you might have a mate to add to the pot if they are willing, but a child will eat up your money real quick. Sell off some stuff you don't need anymore. Hobbies may have to be put on hold...no more video games and CDs. get a radio for noise. Sell the stereo. Figure it out for yourself--the world is full of over extrended people. Cut up the credit cards. Good luck and have a nice life.

Answer 4

consistency. You have to put a certain amt of money away. Live within a budget. Give up things you don't need (smoking, buying the newspaper, eating out) basically pinch pennies. Use coupons. Don't let your $ sit in bank savings acct. Look into money markets, mutual funds. don't invest in the long term w/ stocks. You can lose $ quickly in stocks so go w. a mutual fund for diversity. Raise your dependents to 3or4 so you get the $ each paycheck instead of at tax time. Remember, consistency is key. I saved and invested for 5 yrs before buying my home and put down 60k. It can be done. Good Luck!

Answer 5

You can buy bonds through payroll savings plans. This is how I got my down payment.
If you live in Canada and you have RRSP's the Government has a program where you can take the money out without penalty and apply it to a down payment then return your money to the RRSP over a 15 year period. It's called the Home Buyers Plan.

Answer 6

Save $5000 per year!