Tips on How to Save for a Mortgage Down Payment

posted on Tuesday, June 20, 2023 in Financial Tips

Mortgages are secured loans offered by financial institutions. They are taken from a property you own, whether it’s your house, shop, or land. Your property will then be the collateral and stay in the lender’s possession until you repay the loan in full. Mortgages are easily approved and can help build your credit score if paid on time.

Most people use mortgages to buy new properties, and lenders often require some money for a down payment before they can sign up for a loan. That said, here are some tips you can follow to save up the money for a mortgage down payment:

Set a Savings Goal

It’s best to plan a savings goal to have a general idea of what you want to achieve by saving up. Consider how much the property you wish to purchase is. For example, if you’re going to buy a house worth $100,000 with a 20% down payment, you will need to have $20,000. Some financial institutions are willing to accept a lower down payment for first-time home buyers.

Be sure to give yourself a realistic timeline to achieve this goal. That will help you gauge when you are ready to make that down payment.

Start Budgeting Your Expenses

Now that you have a specific goal, start building a budget. Calculate how much your monthly income is, and then subtract all of your recurring expenses like rent, utilities, groceries, and other loans you may still have. By budgeting, you’ll know where your money goes and how much you can save.

See if you can eliminate unnecessary expenses like impulse shopping and eating at a restaurant. That extra money can then be saved for your down payment.

Find Ways to Increase Your Income

Budgeting can only do so much. If you can, think of other ways to earn more. Finding a side hustle like dropshipping, freelancing, or selling handmade goods can help you gain more money. You can also try selling old stuff you don’t need anymore. Any amount you earn from your side hustle can boost your savings for the down payment.

If your current salary isn’t enough anymore, you can also see if there are other employment options available. Start by browsing through job posting sites and researching other openings with higher pay you qualify for.

The Bottom Line

With enough time and dedication, you can buy the house of your dreams. If you need assistance with your finances, contact us today at Community 1st Credit Union. Talk to one of our C1st representatives today to learn more about our personal services.