Buying a home for the first time can be exciting, but it can also mean making a significant investment. If you’re like many first-time home buyers struggling to come up with a down payment, we want you to read over these tips for saving up:
- Get pre-qualified—Many first-time home buyers forget this part of the savings process. Even if you don’t plan on making a purchase for a while, head down to your bank and become pre-qualified for a mortgage. This can give you a target amount for your down payment.
- Set a timeframe–Once you are prequalified and know how much you need to save, you can figure out how long it will take to save up for a down payment. By setting a realistic timeframe, you can also determine how aggressive or relaxed you want to be with your savings.
- Pick your savings vehicle—We’ve seen many first-time home buyers try to put their savings into a risky investment in order to reach their down payment goal faster. While this might work in some cases, it’s best to go with low-risk saving vehicles, like a certificate of deposit or a standard savings account.
- Restructure your budget—Saving up for a down payment means that you’ll probably have to make some sacrifices along the way. Try to cut back on your savings, add additional income every month, or use a combination of both of these strategies.