My husband and I started saving for the down payment on our dream home right after we were married. As a military family we’ve lived in 20 different homes. They were homes to us because we lived there, but they weren’t our dream home. We recently purchased our dream home and we plan on enjoying our it as long as the military keeps us here. We used 7 simple budgeting and planning tips to be able to save a down payment for our dream home. You can use these same budgeting tips to plan for your future dream home now.
My husband and I chose to start saving for a down payment on our dream home from the first year of our marriage. We wanted to save a down payment large enough that we could purchase the home of our dreams and keep the monthly payments low enough to be manageable. Because we knew our goal, we put everything we had into budgeting so that we could save the down payment of our dreams. It was hard work, but not difficult because we followed these 7 budgeting tips.
Live on One Income and Save the Other
If you have two incomes in your family, live on just one income and save 100% of the other income. If you don’t have 2 incomes, then get a part-time job in addition to your full-time job and save the part-time income. It will be hard work, but if you can save 100% of a second income for several years, you’ll have saved a decent-sized down payment for your home purchase. You’ll also have developed amazing saving habits that will help you throughout the rest of your life.
Save every raise and bonus until you save enough for your down payment.
Do Your Own Taxes
Take the time to do your own taxes. I know, I hear the groans, but doing your own taxes every year will save you a couple of hundred dollars a year. As importantly as saving that money is the insight it will give you into your own finances. If you take the time to wrestle through you own tax form every year, you’ll know your finances inside and out. That knowledge will help you take charge of your money and save even more as a result.
Learn About the Mortgage Process
Buying a home can be intimidating, especially for a new home buyer. Taking time to learn about and understand the home buying process is key to being able plan for your dream home. A great place to learn about home buying is the Capital One Home Loans Online Neighborhood. It is a free online resource where you can learn all about buying a home. They’ve gathered easy-to-understand articles and helpful videos to demystify the home buying process. There’s also detailed information about Capital One’s Home Loans offerings.
No Car Payment
Do whatever you can to get to the point that you don’t have a car payment. Save the amount that you formerly (or would have) paid for a car loan. Save 100% of that amount. That savings will add several hundred dollars a month to your down payment savings goal.
If You Can Do It Yourself, Do It
Don’t pay someone else to do work that you can do yourself. You’re the only one that can decide what those jobs are, but take a long hard look at tasks you can do yourself and save the money you would have paid someone else. Consider tasks like: mowing the lawn, cleaning your home, pressing and ironing work shirts, grooming your pet, washing your car and basic car maintenance. Those are chores that may not be fun, but you can save up to several hundred dollars a month towards your down payment by doing these chores yourself.
Figure Out How Much Home You Can Afford
Knowing how much home you can afford will help you decide how much to save for a down payment. A general rule of thumb is to look at houses that are 2 1/2 times your annual salary. Your goal is that keep your monthly home payment under 28% of your gross household monthly income. Look for an online mortgage calculator to help you figure out what you can afford. You can learn more about Capital One Home Loans online or by calling 855-900-8886.
Eat Out Once a Month or Less
Eating out expenses add up quickly. If you commit to not eating out you can save up to several hundred dollars a month. A little planning will help you to save that amount for your down payment. Make your own lunch to take to work. Make your own coffee and take it out with you rather than stopping by the coffee shop. Keep a few snacks at work to keep you from buying snacks from the vending machine. Plan so you aren’t tempted to run through the drive though. No. More. Drive-through.
We are so enjoying every aspect of our dream home, from the black front door to the beautiful two-level deck (which we just finished re-staining ourselves two weeks ago) to the large yard (that we mow ourselves every week).
We’re able to enjoy living in our dream home because we invested the time and energy into following these 7 budgeting tips to save for a down payment on our dream home. What tips do you have for saving for a dream home?
I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own.