Many people who would love to make their homeownership dream come true are sitting on the sidelines because of one significant reason. They do not yet have enough money to make a down payment on a new home. With an FHA loan, you could pay as little as 3.5 percent down. However, on a $300,000 home, that equates to $10,500. Add another 4 percent for closing costs. This brings you to roughly $22,500 needed for this estimate. If homes are pricier in your market or you apply for a different type of home loan, you may need to bring much more money to the table.
Generally, the best time to buy a home is when you have enough money in savings to pay the down payment and closing costs. Keep in mind that your down payment also correlates with your mortgage payment. You may need to make a larger down payment to enjoy a comfortable mortgage payment. You should not get into a situation where you have to put saving for retirement and other goals on the backburner to buy a house.
With this in mind, you now have a reasonable idea of how much money you need to buy a house. How do you raise that money? Here are a few ideas:
1. Trim the fat in your budget, such as by canceling gym memberships and cable TV.
2. Get a part-time job or a side hustle.
3. Stop going out to eat.
4. Take a coffee-to-go cup to work rather than stopping at the coffee shop.
5. Pick up overtime hours at work.
Buying a house is a milestone event that you will undoubtedly appreciate long after you sign on the dotted line, but it can take plenty of time and effort to reach that point. Track your savings progress regularly so that you can keep the momentum moving forward.
Contact one of our loan consultants to learn more.
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