How to Save for a Down Payment on a New Home

If you can afford to save for a down payment on a new home, this is a great way to get better mortgage interest rates. The team at Preferred Capital Funding in Conyers, GA is here to help you find your dream home and save up for your down payment. In this week’s blog post, we share some tips on how you can save up enough money.

What Down Payment Should I Offer on a New Home?

First, you should check around the area to see if any agencies or the government offer down payment assistance programs. If you are low to moderate income, there may be ways to help you afford a down payment. The next step is to review what homes in the area are going for, what the lenders generally require, and how much down payment you will need. Many lenders seek a 20% down payment, but that is not always the case. Certain banks allow you to purchase mortgage insurance if you do not end up providing 20%.  There are other programs that require a lower down payment. Here are some examples:

• FHA Loans—First-time home buyer loans are backed by the Federal Housing Administration (FHA), which can offer mortgages to first time home buyers with down payments as low as 3.5% and sometimes even less!
• VA Loans—Veterans Affairs loans are for eligible service-members, check with the VA to see if you qualify for a mortgage with zero down payment.
• USDA Loans—US Department of Agriculture loans can help you afford a down payment if you purchase a home in a qualifying area.

What to do When You’re Ready to Save Up Funds

Even if you get down payment assistance, you still need to save up money if you want to buy a new home. Imagine the repairs and other insurance costs! You will have many ongoing expenses. Below are some great ways our clients have saved up:

1) Finding extra income through a second job or other second source of income and depositing the extra money into a savings account.

2) Opening a savings account, CD, bond, or money market with a high yield interest rate to hold the funds for the down payment. Find out how much you can save, then set-up an automatic transfer to move money this into the account from your monthly paycheck.

3) Rounding up the change from purchases to place into a savings fund! Many banks let you round up the spare change on any purchase and move it into a savings account.

4) Reducing your non-essential spending, like meals out, vacations, eating out, new clothes, etc.

Preferred Capital Funding in Conyers, GA is here to help you save up for a down payment and find great financing programs for new homes.