Budget Tips for a New Home Down Payment

Posted by Fiona Connolly on Thursday, November 29th, 2018 at 8:46am.

How to Save for a Home Down PaymentA home represents a major purchase and requires a lot of planning. The down payment is usually the biggest hurdle that you’ll have to jump in order to become a new home owner. Use these budget tips to help you save the cash you need to purchase your dream house.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.

Scale Down Your Daily Expenses

The easiest way to start saving for a down payment is to cut your expenses. Start by cutting out some of the extras. For example, make coffee at home instead of purchasing it from a coffee shop. Another option is to renegotiate your monthly financial obligations. If you have a cable package, for instance, bargain for a lower monthly rate and put the difference in your savings account.

If you're one of those people that stands behind another in line at the grocery store wondering why the person in front of you is using so many coupons, you may want to give it a try for yourself to find out why. There are crazy coupons available on the Internet and in the stores that can save you an incredible amount of money on your food purchases. While it may seem small and not really worth your time, everything you do within your power to save some extra money will really add up to a final down payment. It will just take a determined effort on your part.

Cut Down On Your Luxuries

Take a look at your lifestyle and consider anything that you don't absolutely need a luxury. If you do this properly you'll see an incredible amount going towards your housing fund. For example, if you pay for cable TV and only have time to watch it one night per week, you can consider canceling your service if possible for a while. If you have a gym membership and don't use it too often it may be cheaper to sign up for a membership at the Y. and save money that way. There are probably tons of little things that you are paying for that could be considered a luxury. If you're serious about stepping into the home ownership club, you may have to make some sacrifices along the way to see it happen.

Add an Income Source

If you have cut your expenses as much as you can or you want to build your down payment faster, look into developing another source of income. You can take on a second job or perhaps create a side business working from home. Even a small increase in your income can make a huge difference if all of the extra cash can be put into the down payment fund.

Make Smart Investments

Take a look at your investment options instead of stuffing the money under your mattress. Put it to work for you by talking to a financial advisor that can help you make smart short-term investment decisions. Even something like a 12-month GIC can earn a few extra dollars in interest. While it may not be much, every cent that you can add to the down payment will add up.

With a little ingenuity and discipline, you can save up enough money for a down payment for a new home. Persistence and keeping your focus on the goal will inevitably lead to success.

How Can You Ever Save up for a Down Payment While You're Renting?

A lot of potential homeowners are stuck in the rut of paying high prices for rental every month while trying to scrape together enough money for a down payment. Just as you find that you have a bit of extra money in your pocket, the next rent payment comes due. You are scrambling to do two things at once and need to multitask with your finances. In this type of scenario, here are a few tips you can use that may help you put some extra money into your piggy bank that can exclusively be used for a down payment.

Look For A Place With Lower Rent

If you're serious about moving you may want to give up some of the convenience of living in a higher rental unit and look for one that costs less. For instance, if you're currently renting a home you may want to consider renting out a storage locker for your belongings and packing up and moving into an apartment. This may just be the thing that springboards your down payment savings into high gear.

While the thought of downsizing may not exactly be appealing, it's amazing how you can adapt to things when you're actively working on a goal. When you look through the numbers and see how much extra money can be put towards a down payment, you'll be able to come up with a realistic amount of time that you’ll have to stay in your apartment. When you know that there's an end in sight it makes it a lot more palpable to make the best of things knowing that at the end of the time period you'll have enough money to own your own home.

Saving for a Home Down Payment Takes Time

No matter what steps you take to increase your savings towards a home down payment, this process takes time. The purchase of a home is an expensive investment, and the funds can't be raised overnight. By being strategic and frugal with your money, you can ensure you have the financial investment you need to purchase a Calgary home when the time is right.

For informational purposes only. Always consult with a licensed mortgage professional before proceeding with any real estate transaction.

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