How can I ever save a down payment for a house?

Down payment is one of the biggest roadblocks to homeownership, but it doesn’t have to be that way!

Have you been either paying rent or living with family for a while now and you constantly think “How can I save up for a down payment to purchase a new home?”?  You may be ready right now to purchase your first home, but what if you have a year to change your spending habits and save a large down payment and your rainy day fund in less than a year?  You could go from needing a No Money Down Home Loan like USDA or VA to having 5 – 20% down payment which could save a homeowner a lot of money and/or afford more house.  We have put together a comprehensive list of 30 creative, cost-cutting ideas that could save a first-time or even move-up buyer anywhere from $2,000 – $40,000 in a year!  Only a Year!  Many of these ideas will take a strong will or deciding on a lower cost item as a sacrifice for owning a dream home with an affordable mortgage payment.  Some of these items may not apply to you yet some of the items could be an even larger savings than shown, depending on your habits.

Tips Before the Down Payment Savings Tips:

• Print a picture of the type of house you want to purchase & place on your mirror, in your car, and your home screen on your phone to remind you of your homeownership goal constantly.
• Pull out all of your bank and credit card statements, utility and cell phone statements, and any other items that would show how much you spend as a reference for below.

 30 Simple & Creative Ways to Save a Large Down Payment on a New Home!

1. Avoid Insufficient Funds or Overdraft charges in your bank account.  Banks will often charge up to $35 for each time an account goes negative even if negative by just a few dollars.  This can cost a lot of money over time plus mortgage lenders don’t like to see this on bank statements when reviewing for approval.  Don’t let your account go negative and as you build your savings account, use it as a safety net instead of these costly fees.  Savings = $420/year assuming just 1 NSF fee per month.
2. Pay off credit cards every month so that you don’t pay 18 – 30% interest on balances.  The savings on this can range from $10 per month for carrying smaller balances but it can be $150 or even more with higher balances on cards.  Savings = $600 / year
3. Crock Pot Cooking instead of going out to eat.  A meal for 2 at a restaurant for 2 people, including soda and tips could be $50 where a crock pot meal could cost $15 or less and feed the same 2 people for 2 – 3 meals.  Check out cheap & healthy crock pot recipes.  Assuming this substitution once per week, Savings = $1,820 / year
4. Buy in bulk.  For items that will not expire for a long time, buying in bulk to take advantage of lower prices could save a good amount in stores such as Sam’s, Costco, or even regular grocery stores.  Savings = $300 / year.
5. Use coupons at the grocery store.  Lots of grocery stores offer MVP, VIP, and other cards to save money.  Clip coupons to save on groceries and stores will even offer double or triple coupon days.  Savings = $1200/year, people who are good at couponing can increase this savings dramatically.  See the Top 15 Most Popular Coupon Sites here.
6. Choose a higher deductible on insurances:  Choosing a higher deductible for auto, renter’s, and other types of insurance, can save up to hundreds of dollars per year.  Check with your insurance agent to explore money saving ideas.  Savings = $300/year
7. Watch movies on Redbox instead of at the movies.  Going to the movies can cost $40 for a family of 4 not counting how much the concessions are which could easily top $60!  You can splurge and get 2 movies for under $3 on Redbox!  When you join Redbox, you will also get lots of BOGO’s too, especially on Mondays just before the new releases debut on Tuesdays.  Redbox instead of 1 movie per month- Savings = $684/year
8. Visit your public parks and other free forms of entertainment.  There are so many free things to do that provide plenty of entertainment such as the following.  Savings = $1000/year easy compared to other forms of entertainment.
   • Go to the beach or the lake
   • Festivals:  Shrimp Festival at Sneads Ferry, Oyster Festival at Ocean Isle Beach, Pecan Festival at Whiteville, Riverfest in Wilmington, St. Stans Polish Festival in Castle Hayne, and in Myrtle Beach visit festivals like Bike Week, Blue Crab, Mustang Week, & Beach, Boogie, and BBQ
   • Live bands in cities or beaches.  Try The Pier at Garden City in the summers
   • Some museums are free or at least cheap
9. Do free things at home (savings included in #7) instead of going out for entertainment.  Savings = $300 / year.  A family could save this much in just a month sometimes though depending on how often outside forms of paid entertainment are purchased.
   • Play board games with family
   • Read books
   • Play fantasy football with friends
   • Take up digital photography
   • Play sports
   • Hang out with friends
   • Exercise:  This will hopefully also make you healthier which will save on medical costs
10. Drink water instead of tea and sodas.  Restaurants can charge $2.50 – $3.00 for a drink but water is usually free.  A family of 4 could save $12 each time you eat out!  Savings = $500/year (conservative)
11. Have a yard sale:  Look for ways to advertise the sale for free and look to partner with others as a larger sale will attract more people.  Potential Savings = $200-$300
12. Review your cell phone bill:  Are there services that you don’t need that you can cancel?  Savings = $100/year
13. Cancel your landline phone since you have a cell phone.  Savings = $480/year
14. Review your cable or satellite bill to see if there are any services you don’t need.  Savings = $120 / year
15. Be creative in gift giving:  Instead of spending a lot of money on expensive gifts, think of unique gifts you can make such as pictures of you or children to give to grandparents (these mean more than a shirt).  Also, think about if you really need to give gifts to 3rd cousins and all of your friends.  Shirts for 4 people compared to pictures or crafts.  Potential Savings = $300 / year
16. Buy generic instead of name brand.  Savings = $200 / year
17. Buy clothes in the offseason to take advantage of 50 – 75% discounts.  Savings = $300/year
18. Consolidate student loans into one lower payment and even an Income Based Repayment (IBR).  These days student loans can put a crunch on a family’s finances but there are several government or private student loan consolidation programs you could take advantage of.  A consolidation loan could lower the interest rate and monthly payment which can potentially save money monthly and over time.  Federal student loans offer Income Based Repayment (IBR) which can lower payments even down to $0!  Savings = $1,200 / year  or more depending on the amount of student loans.
19. Pack your lunch for work instead of eating out.  An average lunch for fast food could be $6 each day where a good sandwich or left overs could cost only $2 or less.  Drink coffee from home instead of exotic coffees on the road which can save $1 – $5 each time.  Savings = $1,040/year
20. Have a loose change jar so any change you get each day is deposited after the year.  Savings = $50/year.  Not a lot but it will get you closer to that down payment!
21. Look for the cheapest gas around you without driving too far out of the way.  If you live near the SC line, get your gas in SC when you can.  Check cheapest gas in areas at WECT Pump Patrol.  Savings = $58.50 / year assuming a .05 savings per gallon, 15 gallon tank, getting gas 1 1/2 times per week.  Walmart offers discounts when you use their credit card
22. Quit smoking.  Not counting the healthcare costs it should save you, saving 4 packs a week at $6 each, the Savings = $1,248 / year
23. Quit drinking alcohol.  Whether you go out for drinks, buy drinks to bring home, have big drinking nights, or drink a drink or two a night, this can really add up.  Same as smoking, the healthcare costs could be another savings when quitting alcohol.  Conservative Savings = $300 / year but this can be over $1000 for some.  Talk about a dent in the down payment shortage!
24. Change over to a gas saving car instead of an SUV, Truck, or larger sportier car.  You could go from a 20 mpg vehicle to a 30 mpg one.  Assuming $2.50 per gallon, the same 1 1/2 trips to the pump like above going to once a week with a 30 mpg car, and a 15 gallon tank, Savings = $975 / year
25. Learn tips for lowering your electric bill by visiting Duke Energy.  Savings = $100 / year, but this could be much higher.
26. Wash your own car.  A person can spend anywhere from $8 – $30 for each cleaning of a car and can save most of that money by purchasing your own car cleaning supplies to use your own elbow grease.  You can have your kids do it or help you and make it fun.  Savings = $260 / year using the lower end of price for cleaning a car
27. If you are getting married, you could save many thousands of dollars by having a smaller, intimate wedding compared to a large wedding with sit-down meal and party.  The average cost of a wedding in NC & SC is a whopping $24,000 – $27,000!!  A couple could have a very nice small wedding for $3000 or even less believe it or not.  Also use finger foods instead of a sit-down meal.  So consider asking parents to give you a down payment on a house of $24,000 instead of paying for one day of a wedding!  $24,000 could save a buyer $120 per month for 30 years!  Read ideas for a frugal (not cheap) wedding here.  Savings = $24,000 once!
28. Also if you are getting married, ask people to give monetary gifts instead of blenders, etc.  Use this money for a down payment on a house.  Savings towards a down payment = $1000 one time (hopefully only once).  Click here for registering for receiving cash gifts easily.
29. If you rent and want to purchase a home, consider moving out of your rental and into a family or friend’s house for the last 3 months prior to closing.  Assuming saving $800 per month in rent, this could give a huge boost to your assets just before closing of $2400.  Savings for 3 months = $2400.
30. Last but not least, really think about your home purchase and make sure that you don’t buy more house than you can afford.  Buying a house with a payment at the top of your comfort range could make it where your budget is tight every month and one large repair could break you.  This one tip here could save you tens of thousands over the life of a mortgage.

Hopefully these ideas have motivated you to change your spending in order to save a down payment, purchase your first home, and you can even use these tips to drastically change your life forever.  Then do your best to pay yourself first and invest in your retirement at a young age by maxing out your retirement options available to you but that is another article down the road.  So now use the statements that you pulled out and start marking up everywhere you can save money.  We hope to see you in a home within a year!

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