Everyone dreams of owning a home as their first investment; that hasn’t changed over the years. Though its status as a good investing choice is debatable, it’s still one of the biggest financial goals in people’s lives. However, with the current state of things, most Millennials and Gen Zs are probably throwing their hands up now and asking the generation-old (rhetorical) question:
“Buy a house—in this economy?”
And I can’t blame them. Houses haven’t been affordable for quite some time now. The average sales price for a house in the U.S. is a little over $500,000—that’s the flat amount, excluding interests. Meanwhile, the median salary is about $60,000. Even if you cut back on your daily $2 coffee for the next 50 years, you won’t save even 10% of that.
But that doesn’t mean homes are impossible to purchase. Those with the means and the will to buy one have several options.
But of course, we start with step number one: the down payment.
What’s A Down Payment?
A down payment is a requirement for most financing solutions and essentially gets you through the door for your house purchase. It’s a partial payment based on the total amount, and the percentage depends on the financing option that you used.
Here’s a quick rundown of the typical down payment requirements for different types of financing options:
| Loan Type | Description | Typical Down Payment Requirement |
| Conventional Loan | Standard mortgage not backed by the government | 20% |
| FHA Loan | Loan insured by the Federal Housing Administration | 3.5% |
| VA Loan | Loan guaranteed by the Department of Veterans Affairs | 0% (for eligible veterans and service members) |
| USDA Loan | Loan for rural property buyers backed by the U.S. Department of Agriculture | 0% (for eligible rural properties) |
| Jumbo Loan | Mortgage for amounts exceeding conforming loan limits | 10% – 20% |
| FHA 203(k) Loan | Loan for home purchase and renovation | 3.5% |
| HomeReady Loan | Conventional loan program by Fannie Mae | 3% |
| Home Possible Loan | Conventional loan program by Freddie Mac | 3% |
| Piggyback Loan | Combination of two loans to avoid PMI | 10% (80/10/10 loan structure) |
| First-Time Homebuyer Program Loans | Various programs designed to help first-time buyers | Varies (often 3% – 5%) |
Creative Ways to Save for a Down Payment
Saving for a down payment doesn’t have to be daunting. Here are some creative ways to build your fund:
Set Up a Dedicated Savings Account
Create a separate savings account specifically for your down payment. Make it so that this savings account is a “deposit and forget it” type. To make it even better, automate transfers from your primary account to ensure consistent savings.
Cut Unnecessary Expenses
We’ve all got that subscription or monthly expense that we don’t need but can’t seem to remove from our monthly budget. If that’s the case, you need to decide and cut it out so you can buy a house. Review your monthly expenses, identify areas where you can cut back, and redirect these savings to your down payment fund.
Reducing fixed expenses is also a great way to bolster your financial health. So, cut corners wherever applicable and appropriate—and make it a habit.
Always Look For The “Save More” Option
If you spend a few minutes researching, you’ll be surprised at how much money you can save on practically anything.
For example, did you know some companies will send you free samples of stuff you use at home?
And if you happen to go away for the weekend when booking hotel rooms for international travel (either for work or leisure), you might want to look into the best room rates and the cheapest days, then work your way from there.
You can also up your game and pre-buy other things like discount travel passes and tickets, prepaid cards, or other necessary items for day-to-day cell phone and internet access. Trust me, they’re significantly cheaper this way, as opposed to when you need to buy them at the moment of need.
Coupons and shopping for necessities during discount periods work well, too. You just need to put in the work to find out when those are.
Take on a Side Gig
Unless you’re easily making six figures, one job is not enough to fund your home fast. So, it’s best to increase your stable income by getting into side hustles, like part-time jobs or freelance work.
Are you good at writing? Write articles for cash. Crochet enthusiast? Take orders or sell your work in online marketplaces. Regardless of what it is, take your interests and make some money off of it.
The extra income can significantly boost your savings, making it one of the best creative ways to save for your home down payment.
Save Windfalls and Bonuses
It’s good to spend money on yourself occasionally. But remember, you need to be consistent, fastidious, and creative when saving for your house’s down payment. That means any and all income sources are up for grabs—so that you can buy your dream house faster.
So, shove those tax refunds, work bonuses, and incentives into your down payment savings account.
Sell Unwanted Items
Take inventory of your stuff and list what you no longer need. Then, go to your favorite online marketplace and sell them. You’d be surprised at how much money you can get from the junk littering your basement and closet.
Use Financial Assistance Programs
Explore down payment assistance programs offered by state or local governments, non-profits, and private institutions. These programs can provide grants or low-interest loans to help with your down payment. Just make sure you meet their qualifications and requirements, and you’ll be set.
Final Thoughts On Creative Ways To Save For A Down Payment
There are many creative ways to save for a down payment. However, all of them require planning and discipline. Explore various savings methods and financial assistance programs while keeping your spending aligned with your goals, and you can make your dream of investing in real estate a reality.
But you don’t have to do it alone. Remember to consult with a financial advisor or down payment assistance provider to ensure you make the best choices.
