Before you can make the transition to a new home, you will need to have a substantial down payment, typically anywhere from 3% to 20% of the home’s value. If you’re currently paying rent and/or have other high expenses such as student loans or credit card debt, figuring out how to save for a down payment could feel like a daunting task. Depending on the type of mortgage you are interested in and qualify for, you’ll want to get a sense of what percent down payment you may need. For first-time homebuyers, this could be as low as 3%. For most conventional mortgages, 20% is the rule of thumb. If you’re unsure, connect with a mortgage lender to learn about your options.
Franklin Savings Bank suggests the following tips on how to save for a down payment:
Develop a budget and timeline.
Start by determining how much you’ll need for a down payment. If you don’t know, try our calculators to see how much home you can afford. Then, create a budget you can stick to and calculate how much you can realistically save each month.
Look into state and local home-buying programs.
Many states, counties and local governments operate programs for homebuyers. Learn more about residential mortgage options available in New Hampshire. Some programs offer housing discounts, while others provide down payment loans or grants.
Establish a separate savings account.
Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.
Monitor your spending.
With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back and instead put that money into savings. If you’re looking for more tips on how to save for a down payment, follow these simple steps.
Now that you know how much you’ll need to save, how much home you can afford, and your timeline, it’s time to start saving for your down payment. Trust us, you’ll be surprised at what you can accomplish!
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