Many hopeful homebuyers across the nation are asking themselves how to get money for a down payment on a house. With inflation climbing, rent rates rising and home prices still high, saving has become more difficult.
The good news? There are a few tips and tricks you can utilize to boost your earnings, cut expenses and otherwise grow your savings. Homeownership can still be within reach. We’ll cover how to:
- Negotiate a raise
- Cut expenses
- Clip coupons
- Access credit rewards
- Save small amounts the easier way
- Naming your savings account
- Increase accountability
- Earn more on the side
- Minimize impulsive spending
- Approach homeownership from a different angle
Negotiate a raise
Of course, one of the easiest ways to fast-track your savings is by earning more. The inflation rate topped 9% in June 2022. So, unless you’ve received an annual raise of equal or greater value, you’re losing money.
What’s more, a staggering 70% of employees who report asking for a raise were actually awarded one. If you believe you have a compelling case, those are pretty good odds. And as long as you ask in a professional way, the worst you can hear is a “no”. Plus, the extra income would be well worth it!
Cut or negotiate expenses
The other surefire way to save is through cutting expenses. You could be unnecessarily spending hundreds or even thousands of dollars per year on streaming services, delivery services, cable, insurance, and more. Consider:
- Rotating streaming services based on the release dates of your favorite shows
- Temporarily committing to cutting streaming services out entirely
- Trying to negotiate your phone bill, credit card interest rate, car insurance and more
Clip coupons
It’s a classic for a reason! According to the Promotion Marketing Association’s Coupon Council, the average family can save between $5.20 and $9.60 per week by using coupons. That’s nearly $500 per year, which is roughly 2.5% of the median down payment amount. As you’ll need to buy groceries either way, coupled with other savings tactics, couponing could help you reach your financial goals that much faster.
Take advantage of credit card rewards
If you already have a credit card, consider utilizing the often-advantageous rewards programs to boost your savings. For example, if you have a trip coming up, trade rewards points for miles as opposed to spending cash. Or refer friends and family for extra points. If you get additional cashback on gas or groceries, use your card for these purchases and immediately pay them off. Your savings will thank you.
Round up your purchases
In addition to your regular transfers, consider this method for saving with minimal effort on your part. Look into apps or programs through your bank which round up purchases and invest or store the excess in savings
For example, if you purchase a $4.75 latte, the extra $.25 will be automatically deducted and saved. While the amounts may seem small, they eventually add up. You might be pleasantly surprised the next time you check your savings account.
Name your account
Saving is as psychological as it is financial. Consider giving your savings account an aspirational name (perhaps ‘dream home fund’ or similar?) to make saving more fun. After all, naming your goals can help them feel that much more attainable.
Get an accountability partner
You’re not the only one asking yourself how to get money for a down payment on a house. The key to building momentum, gathering ideas and taking action might just lie in an accountability partner.
In fact, a 2018 study found that weight loss program participants who worked with a buddy lost more weight than those that took the course alone. Whether you turn to your partner, an app or a friend who is also gearing up for a home purchase, you don’t have to go it alone.
Pick up a side hustle
The extra income a side hustle provides could be extremely powerful in your savings journey. In fact, assuming your day job pays enough to cover typical expenses (and we realize not everyone’s does), you could potentially devote 100% of the proceeds to your dream home fund!
The best side hustle will depend on your goals, location and skills but, from furniture flipping to food delivery, there’s sure to be something for everyone.
Create purchase hurdles
Again, work to cut expenses! Particularly if you’re prone to online shopping or overspending, consider creating some purchase hurdles to deter yourself.
- Delete auto-saved payment information and online shopping apps, so you’ll have to think twice before placing an online order
- Remove that problem credit card from your wallet and store it in a drawer somewhere.
- Never go grocery shopping hungry, and always show up with a comprehensive list.
Overall, just do what you can to make spending money more difficult than saving it.
Evaluate housing
Housing is most people’s largest expense, particularly with rent rates on the rise, which means you may have ample opportunity to cut back. Consider adding a roommate, moving in with family, or relocating to a more affordable part of town. Depending on your location, you may also be able to negotiate rent payments or rent increase limits with your landlord.
Some markets are certainly more competitive than others, so keep in mind that your mileage may vary, but a less-than-ideal temporary housing situation could be worth it for the home of your dreams.
How to get money for a down payment on a house
While saving for a down payment may be a struggle for many homebuyers, today’s challenging market has, unfortunately, made it even more difficult. There is some good news, though! With a few tweaks to your habits, some increased effort and even a little psychological boost, you can still achieve your savings goals and fund that down payment. The current housing environment may mean homeownership is a longer-term goal, but not out of reach!
And don’t forget the many options in the mortgage marketplace. Explore first time buyer programs, choose a loan type with more flexible down payment amount requirements or speak with a home finance professional to determine next steps. Whatever you do, don’t give up on that dream home just yet!
Published on July 25, 2022
