One of the biggest challenges for first-time home buyers is saving for a down payment. Often, new home buyers mistakenly believe they must save 20% of their home price as a down payment. However, depending on your credit and loan terms, you may be able to put down much less.
Another misnomer for first-time home buyers is believing they will never be able to save enough for a down payment. Here are five strategies you can use to start saving money right now.
1. Make coffee at home. Treat yourself to a nice travel mug. Fill up at home and skip the pricey coffee shop on the way to work. $3.25 saved for 300 cups of coffee per year = $975!
2. Pack a lunch. Not only is making your own lunch less expensive, it’s usually much healthier too. Hit up the break room or a local park (bring your library book!) for a change of scenery. $10.50 saved for 250 work lunches per year = $2,625!
3. Ditch the bottled water. If you’re constantly purchasing bottled water, start using a filtered pitcher and a portable container instead. The environment will thank you, too. $0.40 saved for 365 bottles per year = $146!
4. Review your cable package. Do you really need all those channels you’re paying for? Take a good look at your cable bill and consider cutting down your monthly package to include only channels you watch. You could always cut the cord entirely and take up reading again. $103 less per month for 12 months = $1,236!
5. Limit dining out. If going out to dinner friends or family is one of your favorite activities, don’t give it up entirely, just do it at home instead. Get fancy and host a dinner party with candles and home cooking. Or, save time and money and have each guest bring a dish to the party. $200 less per month saves $2,400 per year!
At the end of each week, collect the savings you would have spent on these items. Place the money into a savings account specifically for your new home.
For many, a few lifestyle changes could save more than $7,000 per year. When combined with the prospect that you may not need a 20% down payment, your dreams of home ownership may be a lot closer than you think.
Find more information for first-time home buyers here.