For many, a down payment on the purchase of a home is the largest one-time expense they'll have in their lifetimes. While down payment requirements start as low as 3.5% for FHA loans, homebuyers who put down less than 20% will have to pay mortgage insurance.
Whether your goal is $7,000 or $17,000, saving for a down payment can be done without making drastic lifestyle changes. McCaffrey Homes has gathered these money-saving ideas to help you save for your down payment by making small adjustments that can really add up:
1. Set up a savings account dedicated to your down payment and deposit all windfalls you receive, especially your tax refund. The average tax refund received in 2015 was $3,120, which could give you a great start and help motivate you to continue saving.
2. Reexamine your auto insurance policy, cell phone, Internet and cable TV plans for savings opportunities. Many times you can save just by placing a phone call and asking for a lower rate or loyalty discount. Preparing your meals at home can save you hundreds of dollars every month.
3. Save big on your electricity bills by unplugging all unused electrical devices and utilizing timers, power strips and programmable thermostats. Also, look at lowering the temperature on your hot water heater.
4. Reduce your rent and utility bills by bringing in a roommate temporarily. Consider a family member or friend who's attending college or trying to save for their own down payment.
5. Cook and prepare your meals, snacks and beverages at home. We all know how quickly $4 lattes can add up, but $10 lunches add up even faster. Saving meals out for special occasions can easily save hundreds of dollars every month.
6. Cancel or freeze your club memberships. If it's been more than a month since you've used your gym membership, you may want to cancel it and save that monthly payment. Chances are you're paying more than $30 each month, which adds up to $360 in a year.
7. Evaluate all automatic payments that come out of your account each month. Many online subscription services (such as Netflix) continue until you cancel them, whether you use them or not.
8. Look for inexpensive entertainment options, such as checking out DVDs and books from your local library. You can reserve many titles online and pick them up when they become available.
9. Maximize your use of airline and hotel rewards to reduce travel expenses. Be sure to sign up for loyalty programs to start racking up those miles–especially if you travel for work.
We hope these tips will help you achieve your dream of home ownership. While saving for a down payment can be challenging, building a lifetime of memories in your very own home is worth every penny.
Preparing your meals at home can save you hundreds of dollars every month.