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Accumulating a Down Payment for a Home
Most lenders require a certain level of down payment to consider you for a mortgage. This amount usually varies and depends on a number of factors, including loan type, credit history, type of home being purchased and the current financial market.
In figuring out how much you have to put down on your new home, be conservative. There are a lot of expenses – property taxes, insurance, home repairs, etc. - associated with moving and home ownership. You don’t want to stretch your budget too thin.
Here are a few tips to consider when saving for a down payment:
- Reduce spending – This is important. Most people end up saving for a few years to accumulate a down payment for a home. Look for ways to reduce spending on non-necessities. If you don’t currently use a budget, put one together. With a little effort, you’ll be surprised how much you can save.
- Move – Consider moving to a cheaper house or apartment while you save up a down payment. A reduction of a few hundred dollars a month in rent can add up quickly.
- Reduce high interest rate debt – Pay off any credit card debt you have so you can stop paying higher interest rates. You’re losing money you could be saving to buy a house.
- Get a second job. And save every penny earned.
- Skip a year’s vacation.
With a solid plan, steady discipline and some hard work, your dream of home ownership can soon become a reality.
This content has been provided by Financial Wisdom and is intended to serve as a general guideline.