Tips for Saving for a Down Payment
It may be easier than you think to save for a down payment on a home. Some home buyers believe they need a much higher down payment amount than they actually do. And some simple savings strategies can help you reach your goal sooner than you might imagine.
YOU DON'T NEED A 20% DOWN PAYMENT
It’s a common misperception that lenders require a down payment of at least 20% of the price of the home. SLFCU offers a program that can help qualified first-time homebuyers purchase a home with a down payment as low as 3% in most markets.*
BUDGETING STRATEGIES
Even if you can only save small amounts of money, that savings will add up over time. Build a budget so you know where all of your money is going, and look for places where you can reduce expenses. You could cancel cable TV, cut back on eating out, or get a new quote on your insurance.
Put the money you save each month into a savings account, but also consider larger changes. Could you move to a less expensive apartment or get a roommate? Would an additional part-time or second job fit your schedule?
Potential yearly savings:
Cancelling cable TV: $65/month
Making coffee at home: $60/month
Eating out less frequently: $60/month
Switching car insurance: $20/month
Moving to a smaller apartment: $60/month
Exercising at home instead of the gym: $50/month
Savings over one year: $3,780
SLFCU has budgeting resources to help you get started.
OPEN A SAVINGS ACCOUNT FOR YOUR DOWN PAYMENT
Open a dedicated account for your down payment savings so you have a clear picture of how close you are to your goal.
To set up an additional savings account, click here. It’s also a good idea to give the account a nickname in online banking. You’ll be less tempted to spend the money in your “Down Payment” account than a “Savings 2” account.
AUTOMATE YOUR SAVING
Have money automatically deposited into your savings account so that you don’t spend it before you get a chance to deposit it. You can set up a recurring transfer to have money shifted from your checking account into your savings account every week or month. Or you can have your direct deposit automatically split between your checking and savings accounts.
To set up a recurring transfer, log in to online banking and click the Transfers widget. To split your direct deposit between multiple accounts, use the Direct Deposits widget.
USE GIFTS FOR YOUR DOWN PAYMENT
Some home buyers receive part of their down payment as a gift from a family member. SLFCU accepts gifted money as a part of a down payment.
TALK TO US, NO MATTER WHERE YOU ARE IN THE PROCESS
We encourage all potential home buyers to meet with a loan officer to discuss questions and concerns and to learn about SLFCU’s home loans. Call 505.293.0500 or 800.947.5328 to talk to a loan officer or for help with setting up recurring transfers or direct deposit.
*A qualified first-time homebuyer could purchase a home with a 3% down payment in most markets with a first 5/5 adjustable rate mortgage for 80% of the value of the home in conjunction with a second 5/5 adjustable rate mortgage for up to 17% more of the value of the home.
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