Published on 03-06-2020
Categories: Member Tips
How to Save for a Down Payment on a House
We’ve compiled a list of smart savings strategies that can help you hit your home-buying goals. With these tips in mind, you can figure out how to save for a home and get there quicker than you might think.
Plan your House Budget
Before you know how much you need to set aside for your down payment, figure out how much house you can afford. Experts suggest spending around 25-30 percent of your income on your mortgage. Keep in mind that most lenders won’t approve a mortgage that would cost you more than 35%. If you need to crunch the numbers, use Coastal’s Home Affordability calculator to get an idea of how much home you can afford.
Set Your Savings Goal
When calculating how to save for your home, consider two costs. The initial costs such as down payment, closing costs, appraisal, and inspection and the ongoing costs for repairs or future mortgage payments.
Set a Timeline
Set a target date for when you want to be ready to buy a home. This will be a huge motivator for you to stay on towards your savings goal. Don’t forget that the shorter your timeframe is, the higher your annual savings goal will be.
Make a Budget
You’ll be amazed at how much money you find when you pay attention to your spending. Tighten your spending temporarily while you work on making your home dream a reality. Ditch that morning Starbucks coffee and make your own, trim out your clothing budget, only eat out on special occasions, and consider dropping cable since streaming services are a cheaper and more popular option. Get creative and think up even more ways you can save!
Set up an Automatic Savings Plan
Set up an automatic savings plan so that money can move from your account to your dedicated savings account without you even seeing it happen. This way all temptation and ability to spend money on other purposes will be removed. You’ll be one step closer to reaching your goal!
Once you’ve saved, it’s time to start looking for your home! But first, get pre-qualified to show your lender that you can make the necessary down payment and your income can cover your future mortgage payments. To get started, talk to a Coastal mortgage loan officer to discuss your options.
All loans are subject to approval.