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11 Ways to Save for Your Home's Down Payment

You've made the big decision: it's time to buy a house! Purchasing a home is a big milestone. Searching for your dream home, viewing home photos, envisioning your furniture in the space, it's all very exciting.

One component that can often be forgotten when buying a home is the down payment. I'll be showing you how to prepare for your home purchase, setting your budget, and helpful ways to save for your home's down payment. Let's get started.

What's a Down Payment?

A house down payment is the cash required for you to put toward the home purchase. The down payment amount can vary and is based on several factors, including:

  • Whether or not you're getting a home loan or paying cash outright
  • The type of home loan you get
  • The type of home loan you get
  • Bank requirements
  • Your credit score and other home loan qualifying factors

You'll want to begin by determining your home's budget.

1. Determining Your Budget

First things first, before you start the house hunting process, you want to determine your budget. There are several ways you can achieve this. A good starting point? Speak with your bank. They can help you uncover how much house you can afford and from there, what your potential budget can be.

Here are some other tools that will offer you help:

How Much House Can I Afford? Calculator

Home Budget Calculator

How Much Do You Need For Emergencies? Calculator

Household Budget Worksheet

Once you determine your budget, the next step is to map out your purchase plan. Will you get a home loan or pay cash for the house? Most people opt for the home loan.

2. Setting a Timeline

After you set your budget and figured out your down payment amount, you'll want to set a timeline. Ask yourself these questions:

How quickly do I want to purchase a home?

How fast (or how slow) will I be able to save for a down payment?

What factors will impact my ability to save?

Whether it's six months out of six years out, it's great to have a measurable goal. Now, it's time to start saving!

3. Cutting Back on Extra Expenses

people spending less

You might have to adjust your lifestyle a bit to save for your home's down payment. Don't worry; this may only be temporary and it will be totally worth it when you purchase your house.

Here are some examples of cutting back:

Eat out less: Cook more at home and cut back on dining at restaurants and fast food establishments (you'll probably feel better too!)

Cut back on entertainment activities like going to the movies, dinners out, vacations, etc.

Carpool: See if your employer has a car sharing program. Carpooling can cut expenses like fuel, maintenance, etc. You can practice carpooling at home. Share one vehicle if you and your partner have errands to run or ride to work together.

Shop for essentials only: This means cutting out those extra shopping trips and buying needs-based items like groceries.

Pack your lunch: You can save a TON of money by bringing your lunch to work instead of dining in the cafeteria or going to a restaurant.

Save water: Take shorter showers, don't run the water while your brush your teeth, and practice other water-saving activities. Check out:25 Ways to Save Water in the Home and Yard

Cancel memberships: Cut out memberships to the gym, house cleaning, and more.

Cut back on self-maintenance expenses: This includes things like going to the hair salon, getting nail manicures, facials, and such.

Write down and track all of your expenses: This is the most important task and will help you stay accountable.

Helpful reading:6 Budget Pitfalls to Avoid

4. Setting up Automatic Deductions

auto deduction form

With automatic deductions, when you get paid, your employer deducts a portion of your paycheck and deposits it in a separate account. You'll choose how much you want to save and what account to deposit the funds.

The savings are automatically deposited, making the process simple.

If your employer doesn't offer this option, talk to your bank about auto-deducting options so on paydays the money moves to your savings account seamlessly.

5. Saving Your Loose Change

It might sound a little funny and maybe even unrealistic but saving your loose change adds up. If you throw away the extra change in a 4L empty wine bottle, it can easily add up to over $1,000.

Read here how financial blogger J.D. Roth saved $723 effortlessly by stowing away extra loose change.

6. Reducing High-interest Debt

This isn't as hard as it sounds. Start with your credit cards and work your way through all your interest debtors. Call these companies and ask about lower interest rates. You can even look at options to refinance your car, student loans, and more.

Be advised, some refinancing activities may require a credit check. If you've started the mortgage process, you may want to wait to do this.

This credit check can impact your home loan so be cautious when proceeding with refinancing.

Are your interest rates too high? This is how those high rates affect your costs.

7. Working Extra Shifts

person working extra shift

If possible, work some overtime or take on a second job. Again, this may only be temporary. It'll certainly help you save away for your home's down payment a lot faster.

Some second job options:

  • Deliver groceries for Instacart
  • Drive for Uber or Lyft
  • Make deliveries for Amazon Flex
  • Start freelancing:
  • Perform odd jobs
  • Do jobs online (sites like Fiverr and Freelancer are perfect for this)

Check out These5 Great Second Jobs for Extra Cash

8. Earning Extra Money

Aside from taking on overtime of getting a part time job, there are other ways to earn some extra money. Here are some great examples you can start with:

  • Hold a garage sale
  • Sell household extras on eBay
  • Participate in online paid studies (some pay as high as $400 per study, from companies like 20/20 Panel)
  • Become a mystery shopper
  • Babysit
  • Housesit
  • Petsit

There are even unconventional ways for earning extra money like through cell phone applications, surveys, and renting out your stuff like your car.

Even getting into shape and eating healthy can help you save. Here's how:8 Ways a Healthy Lifestyle Saves You Money

9. Switching Your Utility Plans

Changing to a less expensive utility plan is a great way to save some extra bucks. Downgrading your Internet service, switching from pricy cable to less expensive options like Netflix, and downgrading your cell phone plan are some examples.

Here are more ways to save money around the house:

Reduce your water and electricity usage

Keep a watchful eye on the thermostat and reduce air conditioning or heating usage by opening (or closing) windows

Turn off lights when you leave the room

Unplug appliances until it's time to use them

From ShoutMeLoud,Eye-Opening Money Saving Tips That Only Smart People Know

10. Looking for Down Payment Assistance Programs

person looking for local down payment assistance programs

Getting down payment assistance can be a game changer. These programs vary greatly but some offer no interest rate loans and a few even give you (not loan you) the money as long as your stay in the house for 5 years.

Check with your state, county, or community to find down payment assistance programs you may qualify for. There may even be some opportunities at your employer.

Some resources to help find down payment assistance programs:

Downpayment Resource

Your state's housing authority

Ask your mortgage broker

Ask your real estate agent

Research housing grants and certificates in your area

You may also be able to borrow from your 401K or IRA plan. You will have to review your specific 401K or IRA plan to determine eligibility, but many plans offer this tax-free benefit for homebuyers.

Helpful reading:

11. Finding a Lender

Thousands of banks offer home loans - start with the banks in your community. Once you choose a bank, you will work with them to pick a home loan that meets your needs. The bank will tell you how much of a down payment you'll need.

Once you get the down payment information, you'll start your money-saving journey.


Saving for your home's down payment is an attainable goal. Following these simple tips will have you reaching your goal in no time.

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