How Much To Save For A House Down Payment

You know, some folks who want to buy a home think they'll never be able to do it because they can't swing a huge 20% down payment. But guess what? Lots of lenders these days don't actually require that big of a down payment. So if you're thinking about buying, don't assume you need to save up as much as you thought. It might be way less!

3% Or Less

Are you thinking of buying your first home? Well, here's some good news. Depending on your credit score and income, you might be able to snag a conventional loan with just a 3% down payment. And guess what? If you’re eligible for a USDA or VA loan, you can even bag a home without making any down payment at all. But, just to let you know, at the moment, Rocket Mortgage® doesn't offer USDA loans.

Now, if you don't meet the criteria for a USDA or VA loan, don't worry. Some states have aid programs for first-time home buyers like you. So, as you start saving up, do your research and find out about the down payment assistance programs available in your area. You never know, you might just qualify!

The 20% Myth

Hey, have you ever wondered why most people think that having a 20% down payment is necessary when buying a home? The truth is, it all comes from the private mortgage insurance (PMI) rule that many lenders and mortgage investors follow. Basically, if you end up putting down less than 20%, you may need to pay for private mortgage insurance every month as part of your mortgage payments. While putting down 20% can be helpful in saving you money in the long run, it's not a set requirement for buying a home. So, don't stress too much about trying to gather a huge amount for a down payment!

Home Affordability

If you're starting to look for a home to buy, it's helpful to find out how much you can afford to pay. This will give you a more accurate idea of what you can save for your down payment. And if you're planning on buying quite soon, make sure you get a mortgage preapproval. This way you'll have a better idea of how big of a down payment you need, because it'll usually be a percentage of the house's price.

How To Save Money For A House

So, you've figured out how much money you need to buy your dream home, that's great! Now, it's time to start saving up for it. It doesn't matter whether you're starting from scratch or already have some cash put away, there are some tips and tricks you can use to get started on saving for your down payment. Let's dive in!

1. Create a Budget and Stick To It

You should create a budget that includes all of your expenses and your income so that you can determine how much money you can put toward your down payment. Make sure to stick to this budget so that you stay on track with your savings goals.

2. Start Saving Early

The sooner you start saving for your down payment, the better. Try to start by saving at least 10% of your income each month so that you can slowly build up your savings over time.

3. Make Extra Money

Look for ways to make extra money in order to add to your down payment savings. This may include taking on freelance jobs, getting a second job, or selling items you no longer need.

4. Reduce Your Expenses

Look for ways to reduce your expenses so that you can save even more for your down payment. This may include cutting back on certain luxuries, like eating out, or getting rid of unnecessary subscriptions.

5. Take Advantage of Tax Benefits

If you’re a first-time homebuyer, you may be eligible for certain tax benefits that can help you save for your down payment. Doing research on these benefits and taking advantage of them can help you save more money.

6. Invest Your Savings

Investing your money can help you increase your savings and reach your down payment goal faster. If you’re comfortable with taking some risk, you can look into investing in stocks, bonds, and other investments.

7. Get a Loan

If you don’t have enough saved for your down payment, you may be able to get a loan from a bank or other financial institution. Just be sure to research the loan terms carefully so that you know what you’re getting into.

8. Consider a side hustle

If you're looking to make extra money for a down payment, there are plenty of side hustles to explore. Freelance writing, website design, virtual assistant work, tutoring, starting your own business, odd jobs - like yard work or pet sitting - Uber/Lyft driving, renting out your car, surveys, and selling items online are all possibilities. You could make a decent amount of money with any of these options!

9. Open a high yield savings account

Opening a high yield savings account can be a great way to help your savings grow faster. By taking the time to research and compare different savings accounts, you can ensure that you are getting the best return on your savings.

10 Look for down payment assistance programs

Overall, down payment assistance programs can be a great way to help make homeownership more accessible and affordable, so it's worth doing some research to see if there are any programs that are available in your area.

11. Save your windfalls

It's a great idea to save any extra money you get, such as bonuses, tax refunds, and gifts. This way, you can build up a financial cushion and become more secure. Having money saved up can help you out in an emergency, and also give you a chance to make more money. Saving your windfalls is the fastest way to reach your financial goals and be ready for anything life throws at you.