How to Save for a Down Payment

Saving up enough money for a down payment on your first home can take years – especially if you’re aiming to have a 20% down payment. However, there are some things you can do to speed up the process a bit. Check out these tips and get started.

1. Set a clear goal for your down payment

   You may have plans to save a full 20% down payment or more, and if you can do it that’s fantastic. For a lot of first-time homebuyers, the 20% guideline is a tough goal to reach, but that doesn’t mean homeownership is off the table.

   There’s no reason why you can’t set a goal that’s more realistic for your situation. Saving 10% or less is an option, especially if you qualify for affordable lending options that don’t require a steep down payment.

   Get an idea of housing prices in your preferred area to help evaluate your plans. Consider factoring extras such as closing costs and fees into your saving plan.

2. Establish your budget and make adjustments

   Once you have your saving goal set, decide how much you want to save each month. Review your expenses and income to see where you can adjust to save more.

   For instance, can you cut down on dining out? Are there streaming services you’re not really using that you can cancel? Do you have subscriptions that you can live without for a while?

   Anything you can reasonably live without for a while should be up for consideration.

3. Set up automatic transfers

   Start saving automatically by setting up recurring transfers from your checking account to your savings account. You can start small by having smaller amounts, say $20 or $50, transfer to savings every time you get paid. Then, work on increasing that amount over time.

4. Skip vacations for a while

   If you’re used to taking a vacation or two every year, putting a pause on travel plans could be an easy way to save money for a down payment. See if scattering a few day trips or weekend getaways to more affordable, local destinations throughout the year are enough to scratch your itch for travel for a bit while you focus on saving.

5. Consolidate your high-interest debt

   If you’re carrying high-interest balances, investigate rolling all your debt into one lower-rate loan or credit card. You’ll streamline your finances by having just one payment to make each month and save on interest payments while paying down your debt faster.

6. Consider a side-hustle to boost cash reserves

   If you have the time and energy, you might want to pick up a few hours at a part-time job or look into driving for a rideshare service for a while. Maybe you have a talent or skill you can channel into a side gig. You could also consider selling some of your stuff that you don’t need anymore on an auction site or by having a rummage sale.

7. Save financial windfalls

   Expecting a bonus, raise or tax refund this year? Instead of using that extra money on a shopping spree, put it directly in savings. You probably won’t miss what you didn’t have, and you’ll be that much closer to your goal.

8. Keep your old car longer

   The longer you keep your existing wheels, the more you can save (assuming it’s not in need of repairs, that is). Plus, avoiding new debt like a vehicle loan while you’re saving for a down payment on a home helps your credit score, which will matter when you get your mortgage.

It takes time and dedication to amass a mortgage down payment, but just because you’re working on saving doesn’t mean you can’t enjoy things you love. Build in rewards for a job well done, like a night at the movies or a mani/pedi with your best friend. Planning to treat yourself occasionally can help you stay motivated and focused on your larger goal.

UW Credit Union is committed to making homeownership affordable and accessible for as many people as possible. If you need extra help making a down payment on your home, consider exploring down payment assistance programs that are available in your area. Talk to our mortgage lending team about your eligibility for these programs. It could be just the thing that helps you make owning a home a reality. 

Ready to buy? Get in touch with our local mortgage lending experts or get preapproved. 

Still researching? Explore our Mortgage Learning Center.