Saving for a down payment to purchase a house can
seem overwhelming unless you break it down into
small, actionable moves. It will likely take a while
to accomplish, but with a couple of shortcuts and a
never-thought-of-that hack or two, you might get it
done sooner than you expected.
the monthly payment. Start fast, and the momentum
will build. Seed your down payment fund with a bonus or other windfall. A quick start might motivate
you to see the balance make even bigger. Visualize
your goal. Slap big, beautiful photos of your dream
house on the refrigerator, near your office workspace
— and wrap a small one around the primary credit
Four basic steps can get you to your goal: Knowing card in your wallet. You might charge less and save
how much you’ll need, socking the money away, more. Use an app to track progress. Mint, SavedPlus,
tapping any available outside sources to send your Dollarbird and other budgeting tools may give you
fund and gaining a small edge with interest.
even more incentive to keep.
Most lenders are looking for a 20% or higher down
payment on a conventional loan, but there are options where you can put down much less. However,
with a smaller down payment, you’ll likely be required to pay for mortgage insurance. That protects
the lender from you defaulting on the loan. If there
is no mortgage insurance requirement, there can be
other upfront or ongoing fees. You’ll always want to
be aware of loan costs.
If you’re not a disciplined saver, skip the next three
paragraphs. Tapping retirement accounts for help
with your down payment can set you back in your
life-after-work plans. But it’s an option we’re obligated to discuss.
First-time home buyers can withdraw up to $10,000
from an IRA without penalty to purchase a home. If
you’re married, that could mean applying as much
as $20,000 to your down payment, because both
There are some low-down-payment programs you spouses can draw $10,000 from their respective
might qualify for including: GSE-backed loans, Fan- IRAs. Of course, you’ll have to pay the income tax
nie Mae and Freddie Mac, FHA, VA, or USDA. How- due on the withdrawal, unless you have Roth IRAs.
ever in this competitive seller’s market, the higher
the Down Payment, the better chance to