Creative Ways to Save for a Big Down Payment

Young happy couple holding keys to new home moving to a new home

You want the house—that wonderful three-bedroom with the big windows and almost-perfect location—but you don’t want to borrow more than you have to, you don’t want to pay private mortgage insurance and you for darn sure don’t want to con yourself into one of those lower-interest adjustable rate mortgages that can come back to sting you at just the wrong time (watch “The Big Short” with Steve Carell and Christian Bale if you want to know why).

So, in that vein, here are some ways to save for that down payment. Start by opening a special savings account, and then …

Make small goals. Goals that aren’t made don’t get met. So, if you’re trying to save, say, $40,000 to put down on that first home, don’t think about saving up the entire $40,000. Think about the first $500. When you’ve reached that, save the next $500. Then the next. And don’t touch it. Not for a vacation, not for a bigger TV. Nothing.

Round up. When you make a purchase, round up to the next dollar (or $5) and deposit the change into your savings account on your bank’s app. It’s never been easier to do, and you can do it right there at the store.

Make it a contest. With your partner, wage a contest. See what you’ve spent, on average, the past three months on, say, eating out, clothes and entertainment. See who can spend the least on those three things for the next three months and divert the savings into your down payment savings account.

These and other measures can get you to a level of savings you may have thought was undoable a year ago. And before you know it, you have the cash to put down on the house you’ve always wanted.

 

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