Fast Money Blog
How to Save for a Down Payment on a Home
The first step is to understand how much you’ll need to save. Talking to a mortgage expert like the ones at Bank of Colorado can help you understand your options. A 20% down payment is generally seen as a good number to aim for, and is typically the amount you’ll need to put down to avoid mortgage insurance, which adds an additional expense.
Use a mortgage calculator to help you determine how much you can spend on a home and how much you’ll need to put down. Keep in mind that the monthly mortgage is only part of your home buying expenses. Consider maintenance, insurance, homeowner’s association fees and other expenses when determining how much you can spend.
Now it’s time to start saving. Here are a few tips to help you get started:
1. Make saving automatic. Have money automatically transferred from your checking account to a savings account right after your paycheck is deposited.
2. Temporarily cut expenses. The money that you are spending on cable, online video subscriptions, music, clothes, etc. can all go toward your down payment.
3. Start a side business or get a part-time job and put the extra money you earn toward a down payment.
4. Look into homebuyer assistance programs. States and the federal government have programs that can help first-time buyers afford a home.
5. Apply any bonuses or raises that you receive at work toward your down payment.
When you’re ready to purchase your home, Bank of Colorado is here to help with home loans and personal support.