How to Save for a Down Payment

Published on February 26th, 2020

You’ve decided you want to buy a house. Good for you! Whether you plan to do it alone or with a partner, buying a home is an exciting adventure.  To save money over the long run, you want to have a down payment as large as possible. The less money you have to borrow means the less you will have to pay in interest over the life of a loan.  Furthermore, if you can put down 20%, you won’t need to purchase Private Mortgage Insurance. Once you’ve determined how much you want to save for a down payment, it’s time to start trimming the fat and seeking out savvy ways to get to your down payment goal as soon as possible.

Save Before You Spend

For those who bank with us near Melrose Park, we suggest setting up a regular payroll deduction to be deposited in to a Savings Account designated for your down payment.  It’s best to separate this money from your checking account and spending money as soon as you get paid, because waiting until the end of the month to save may not leave you with much.

Cut Expenses

We all have them—superfluous expenses, such as paid memberships, streaming subscriptions, and bad days that seem best solved with an expensive takeout order. While these things might bring some temporary comfort, limiting these expenses and putting more towards your down payment to reach your long term goal may be worth a lot more to you. Only you can decide how bare-bones you’re willing to live, but the little things can really add up. Consider this: a $20/week expense is worth $1,040 over the course of a whole year!

Negotiate and Shop Around

Certain items are a necessity and cannot be eliminated, such as a car and a cell phone, so be sure to shop around and negotiate. A $200 cell phone is going to have many of the same features as a $1,000 phone. And if your cell phone plan is high, shop around. If you save $20 a month, that is still $240 saved for the year. With big ticket items, such as a car, make sure to comparison shop and negotiate with the dealer to try to get the best price; don’t settle for the sticker price.  The worst they can say is “no.” You should also shop around for financing and/or refinancing options. At Leyden Credit Union, we finance and refinance loans. We’d love to help you save money every month with a refinance. 

Sell the Stuff

With new toys, appliances, electronics, and clothing being advertised all around us, it’s hard to avoid accumulating a large inventory of items. When you’re saving for something big, you may find there are lots of things you’re willing to part with to afford it. You may have some very sellable items that can recoup a tidy sum of cash. Even a few hundred dollars made at a weekend garage sale is a win!

Side Hustles / Side Gigs

Increasing your income, even if temporarily, can definitely help put you on a fast-track to buying your home. Assess your skills and time; what can you do, and how much extra time are you willing to devote to the cause? Walking dogs, babysitting, bartending, becoming an Uber driver, and taking online surveys are examples of side jobs that may work with a standard workday schedule.

Savings and Checking Accounts in Melrose Park

Leyden Credit Union can help you open up new accounts while you prepare to buy a home. We also offer competitive rates for first mortgages when you’re ready to buy.  If you’re looking to set up a direct deposit and create a separate account to save for your mortgage, we can do it for you!


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