How to start a down payment fund

Saving for a down purchase while renting may seem challenging. Rent is after all pricey! And the price does not decrease. In the summer of 2023, the national average rent for a two-bedroom flat was $1,358.1 With more of your income still going towards paying rent, how are you supposed to save for a down payment large enough to buy a home?

Clear the debt.

Take $5,000 as an example of your monthly take-home earnings. According to statistics, debt would take approximately $1,500 per month from that ($5,000 x 30%). What if you went all out and quickly paid off every loan instead of wasting your money? Using that $1,500 per month to save for your down purchase will total $18,000 in just 1 year

Find a roommate.

Let’s imagine you are a single person renting an apartment while saving up for a down payment on a home. It’s unlikely that a two-bedroom apartment will cost significantly more than a one-bedroom unit. Consider the fact that in the summer of 2022, the national median rent for a two-bedroom flat was $1,358. A one-bedroom flat, however, cost $11,853. That difference is not even $200! Therefore, why not move up to a two-bedroom flat, find a flatmate and halve your rent?

Move to a cheaper apartment.

Jo, our fictitious single friend, is a good example. He currently resides in Tennessee’s Williamson County. Between the vibrant music scene of downtown Nashville and the charming environment of small-town Franklin, live your best life. She tries to save money while trying to buy a house and pay the increased rates that come with residing in such a well-known area.

Cut back on wasteful spending.

Cutting back on items you don’t need is another approach to enhance your down payment savings. Of course, skipping some absurd things can be a hassle. But keep in mind that this is only temporary. These can be included in your budget once you’ve met your first payment objective.

Here are some ideas for cost-cutting:

  • Reduce your restaurant visits and stock up on non-brand name groceries.
  • Instead of vacations, use lodging.
  • Instead of purchasing new goods, opt to purchase old and reusable goods.

Spend less on increases and bonuses.

Do you have the chance to earn bonuses at work? It’s possible that the more you labour, the higher your commissions will be. Or perhaps you owe them a rise. Put all the extra money you make at work towards your down payment target. This is a wonderful approach to save for a home while renting regardless of your job situation.

At the end of the line

You should carefully consider where to save the tens of thousands of dollars you’ll probably need for a down payment and pick the alternative that best suits your requirements and priorities.