You have probably been told multiple times that you need to save a 20% downpayment for your first home. While there are a few exceptions, it is generally a good rule of thumb to follow. Unfortunately, it can be a challenge to save up this down payment quickly since most homes for sale in Prunedale CA cost hundreds of thousands of dollars.
If you are looking to buy a home sooner rather than later, employ these three strategies to save up to buy your first home.
- Set up an automatic savings plan.
While there are some tips and tricks you can use to increase your down payment, the tried and true method is to consistently save money over a long period of time. It can be easy to raid your savings to pay for other, short term goals or to forgo saving during a month when your budget is tight. The best way to avoid these common pitfalls is to set up an automatic savings plan.
Automating your savings helps you forget about the money, making it less likely that you will use your down payment fund for other needs. To do this, you can set up an automatic monthly transfer to an off-budget savings account or use an app such as Acorns. This app rounds all of your transactions up to the nearest dollar, transferring the excess to savings. While it may seem like the spare change will not make a difference, it can add up over time give your down payment a boost.
- Look into assistance programs.
There are countless local and state programs set up to help first time home buyers reach their goals. If you are hoping for some help with your down payment, look into assistance for groups such as:
- Veterans/Active Service Members (VA Loans)
- First Time Homebuyers (FHA Loans)
- Law Enforcement/Firefighters (Good Neighbor Next Door Programs)
- State Employees
Also, if you are a member of a professional organization or a non-profit, look into any programs they offer. Some organizations offer grants or low-cost loans to their employees or other members.
- Save gifts or bonuses.
If you receive any gifts from family members or bonuses from work, apply at least 80% of these to your down payment. Some people receive a large chunk of their down payment from a family member. If this is the case, you will need to carefully document the gift.
Lenders will want to be sure this money will not need to be repaid. A loan from a family member and a gift from a family member are two different things in the eyes of a lender. You will want to minimize your debt to income ratio to get the best rates. A family loan will negatively impact the rate you receive.
Once you have assembled your down payment, reach out to our team at Coastal CA Homes to see for yourself the real estate for sale Monterey County CA has to offer. Call today to learn how to take the next step toward buying your first home.