Strategic and Specific Ways to Save Money for a House Down Payment (PART 2/2: Specific Tips)
It’s no secret that buying a house is one of the most significant (and expensive!) purchases you will ever make. But with a few tips for ways to save money for a house down payment and a little guidance on overall strategy, your dream of buying a home might be more attainable than you think.
We’ve put together a short 2-part guide to first help you come up with a saving strategy, followed by some specific and practical ways you can start saving. In Part 1 we set the groundwork to implement ways to save money for a house down payment with a little strategy.
Now that you have an amount and timeframe in mind to shoot for, you can begin implementing some practical and specific ways to save money for a house down payment.
- Cut out or reduce bad habits and luxuries
- Consider downsizing
- Explore employment options and side hustles
- Put a temporary hold on retirement savings
- Rent out a spare room
- Forego the expensive wedding
- Ask for cash gifts
1. Cut out or reduce bad habits and luxuries
One of the most basic and everyday ways to save money for a house down payment is to cut out or reduce bad/expensive habits and luxuries. It might not seem like much right away, but cutting out some simple extra expenditures daily really accumulates over time. This could add up to hundreds or even thousands of dollars each year to add to your house down payment fund.
Some ideas for cutting out “extras” might include:
- Cook meals at home
- Cancel gym memberships; create a home gym and download some workout apps to workout at home
- Reduce or cut alcohol intake
- Use this opportunity to quit smoking!
- Make coffee at home
- Cut cable and cancel streaming service subscriptions (or at least stick to just one)
- Resist impulse buying and nonessential shopping (just go ahead and avoid that dollar section at Target altogether!)
- Postpone expensive vacations; opt for staycations closer to home instead
- Plan more activities at home for entertainment instead of going out
- Carpool or take public transportation
These are only suggestions! You know your lifestyle and spending habits best and where it would be most effective to make some cuts. And remember, it doesn’t have to be forever! But if it helps as one of the ways to save for a house down payment, the short-term sacrifices you make now will definitely be worth it in the long run.
2. Consider downsizing
Another one of the most effective ways to save money for a house down payment is to consider downsizing while you’re saving. If you’re finding it difficult to make enough room in your budget to save money as aggressively as you need to, downsizing your lifestyle for a while might be a good option.
Downsizing options such as moving into a smaller apartment, moving to a less expensive area, or selling any extra vehicles your family might have are all great ways to live below your means while you save. This will allow you to reduce the required amount you pay each month for necessities. You can then redirect that extra money to the fund for your house down payment to speed up the process.
3. Explore employment options and side hustles
When it comes to ways to save money for a house down payment, you might find that there are several options when you explore your employment opportunities.
When is the last time you asked for a raise at work? If it’s been a while, maybe it’s time to use the motivation of buying a home to go ahead and ask! Browse job posting sites and compare the salaries of positions similar to yours. If you find you are being underpaid, this could be a great opportunity to increase your income and use the extra to help save money for a house down payment.
If a raise just isn’t on the horizon for you, maybe it’s time to consider bringing out your networking skills and finding another higher-paying employment opportunity altogether!
However, if your full-time employment is a non-negotiable factor, you might consider a part-time job or side hustle to make some extra income in your off-time. Some options to consider include:
- Teaching online
- Drive for a ride-sharing company, such as Uber or Lyft
- Dog walking
- Freelance work involving your skills as a writer, photographer, musician, artist, etc.
- Plasma donation
- Sell used items or custom products online
- Become a virtual assistant
However, keep this in mind. The bank is likely going to want to see at least 2 years of employment. There is some wiggle room on this number if you are a W2 employee, as you have a guaranteed paycheck. If you are 1099, the bank or mortgage lender is not going to budge on the two years requirement. Before switching jobs, talk with your lender and real estate agent. They can help you navigate what is right for your situation.
4. Put a temporary hold on retirement savings
If you are actively saving towards retirement, one of the quickest ways to save money for a house down payment is to put a temporary hold on retirement savings and redirect those funds to your house down payment savings. This is especially effective if you regularly contribute a sizable percent of your income to your retirement.
It should be reiterated though that this option is only recommended for short term, and probably not advisable if you are close to retirement. Be sure to speak with your financial advisor if you are considering this option.
5. Rent out a spare room
If you’re looking for ways to save money for a house down payment, you might consider renting out that spare guest room as an easy way to make some extra cash while you save! You can consider options such as house-hacking with a long-term renter. Or for more flexibility, you could list your room online with Airbnb. This would allow you to only rent out that space when it is convenient for you and avoid a long-term roommate/renter situation.
6. Forego the expensive wedding
If you’re getting married and hoping to buy a house together after, it might be worth it to consider foregoing that expensive wedding as one of the most effective ways to save money for a house down payment.
Weddings can be expensive. But if you are willing to make the sacrifice, diverting all or at least some of your wedding fund towards a house down payment instead would make buying a house possible much sooner. There are plenty of ways to save money on a wedding while still having a special and memorable time, and you will be grateful for making that responsible choice later on.
7. Ask for cash gifts
Speaking of weddings (and wedding gifts), while you’re saving money for a house down payment be sure to ask friends and relatives for cash gifts toward that fund for any major holidays. Some might not want to simply give cash, but others might love the opportunity to contribute towards your new home!
Are you considering buying a new home? Give Ruth Stultz a call to see how she can help! Ruth Stultz is a highly experienced realtor who understands Lake Conroe and Montgomery County better than anyone. When it comes to finding the perfect property with everything you want, Ruth knows exactly where to look. You can trust Ruth Stultz with finding your next home, or the sale of your current home.
Love this content and want more? Check out our blog!
