6 Tips for Saving for Your Down Payment
Before you can make the transition from renting to owning your home, you might need to have a substantial down payment, typically 5 to 20 percent of the home’s value. The American Bankers Association suggests the following tips to help save for it:
Develop a Budget & Timeline
Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month – that will help you gauge when you’ll be ready to transition from renter to homeowner.
Planning ahead, it’s a good idea to play with numbers and calculate what your estimated monthly payment might be. F&M Mortgage offers a Mortgage Loan Calculator that helps simplify the budgeting process.
Establish a Separate Savings Account
Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.
Shop Around to Reduce Major Monthly Expenses
It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, Internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.
Monitor Your Spending
With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.
Look Into State and Local Home-Buying Programs
Many states, counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants.
Eligible first-time homebuyers may qualify for one of the many low to no down payment loan options through VHDA. Additionally, ideal for first-time home buyers, and open to all qualified borrowers, F&M Mortgage offers a no-PMI mortgage without income limits. If you’re looking for a no down payment mortgage, F&M’s Spark Loan might be perfect for you.
Celebrate Savings Milestones
Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process.
Contact F&M Mortgage
Flexible lending options from a team of local lenders familiar with your community make F&M Mortgage the ideal lender for your home loans. In-house decision making simplifies the process and competitive rates get you the most for your money. Get started now!
Are you a first-time home buyer? Check out our guide for Virginia!