5 Creative Ways to Save For a Down Payment

Buying a house is no easy task, and figuring out how much to put down can be confusing. To get a better idea of how large or small your down payment should be and how it will affect your mortgage payments, start with a mortgage calculator. Then, get to work on saving for your dream home.

It’s important to remember that you have options when it comes to saving for your down payment, here are a few creative ways to help you prepare.

1. Turn hobbies into side hustles. Turn talents and hobbies into spare cash during your free time. You'll be surprised how quickly it adds up. If you like to take photographs or make music, connect to sites that will give you money for each song or image download. Writers and designers can freelance for marketing companies, news services or blogs. If you like to drive, look into ridesharing apps or food delivery sites. If sports are your passion, look into a weekend coaching job.
   
   Visit sites like TaskRabbit or SlapUp to find local people in need of talented people for home improvement projects, baked goods and so much more. These extra sources of income can go straight toward your savings goals, putting a future home within reach even if your primary income must go toward bills.




2. Cut the cable and call your internet and cell phone providers. In today's world, cable is a not a necessity. Programs like Netflix^®, Hulu^® and HBO^® help you mix and match a custom library of on-demand movies, television shows and news—all for less than a cable subscription. While you're at it, call your internet provider and cell phone company to ensure you're not paying for more than you need. Consider the internet speed and data plan you’re paying for—are they worth the monthly fee?




3. Crowdsource it. Enlisting the help of friends and family could also help you grow your savings. Many mortgage companies allow the use of gift funds for a down payment, and sites like Kickstarter and GoFundMe make it easier than ever to collect donations. There are even crowdsourcing sites specifically made for home buying, like Feather the Nest. Simply ask your loved ones to donate to one of these sites, whether randomly or in lieu of holiday and birthday gifts.




4. Ask Uncle Sam. The federal government has numerous programs to assist homebuyers and offers some loan options with a lower down payment requirement. If you're a law enforcement officer, teacher, firefighter or EMT, first-time homebuyer or veteran, there are programs for you. Start by looking at the National Council of State Housing Agencies or Housing and Urban Development agency to see what's offered in your state. The Federal Housing Administration also has a database of grants based on individual income.




5. Tap into your IRA. Mountain America typically advises against accessing your 401(k)s or IRAs before retirement because too many people end up losing on the deal. Either they’re never able to pay the money back, which results in a hefty tax penalty. Or, due to rules limiting contributions while the retirement account loan is outstanding, they miss out on substantial additional contributions. But, because it is an option, we wanted to include it.

    

   Some 401(k)s offer extended payment plans for those who take out a loan for home buying.  And, some tax laws allow you to use up to $10,000 in IRA funds as a down payment if you’ve never owned a house. If you are considering this course of action, proceed with caution and be sure to speak with your Human Resources department or financial advisor before dipping into your long-term savings.

Mountain America offers a first-time homebuyer program that makes getting into your home easier than ever. Contact us today to see what we can do for you.