How to Save for a Down Payment in 5 Easy Steps

Is buying a new home in your future? If so, it’s time to start saving for a down payment. Having a sizable down payment will put you in a better position for negotiations and terms on mortgage loans. However, saving for a down payment can be the biggest obstacle for first-time home buyers. Creating a budget or applying for down payment assistance are a few of the ways to help you save, here are five things you can do to get started on reaching your goal of home ownership.

1. Set a savings goal: Start by determining how much you need to save for a down payment on the home you want to buy. This will vary depending on the property's cost and the loan type you're applying for. Once you have a target number in mind, create a savings plan that will allow you to reach your goal within your desired time frame.

2. Create a budget: Review your monthly expenses and create a budget that includes a line item for saving towards your down payment. Start by decreasing your debt, then look at areas where you can cut back on expenses, such as dining out or entertainment, and redirect those funds towards your savings goal.

3. Use money tips to accelerate your savings.

    • Automate saving. Set up automatic transfers from your checking to your savings account. Your employer also might allow you to deposit some of your pay directly into your savings account.
    • Save extra money. If you’re fortunate enough to get a raise, bonus, or tax refund, add the cash to your down payment savings rather than spending it.
    • Use a cash-back credit card. You guessed it — put that cash back toward your down payment fund. Put as many purchases as possible on your cash-back credit card to maximize your money back, paying it off monthly so that interest charges don't decimate your earnings.
    • Resist the temptation to make other big purchases like a new car or take expensive vacations.

4. Explore down payment assistance programs: Research any down payment assistance programs that may be available in your area. These programs can provide financial assistance or help you qualify for a lower down payment requirement. There are a number of first-time homebuyer programs in Maine, or loan programs that require a smaller down payment such as:

These programs may be subject to eligibility requirements such as credit, purchase price limits, and income limits. For more information please visit our website or contact us.

5. Increase your income: Consider increasing your revenue. If possible, take a part-time job or sell items you no longer need. You can direct any extra money you earn towards your down payment savings.

Remember, saving for a down payment takes time and discipline, but achieving your goal of owning a home is worth it. If you have questions about home loans, our knowledgeable mortgage professionals are here to help you determine the best options for your situation. To learn more, contact KFS Mortgage Company today.

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