Simple But Effective Ways to Save Money for a House

If you have a goal to purchase a home in the near future, one thing that might be holding you back is coming up with a down payment. Most homebuyers aim to put down 20% so they can avoid private mortgage insurance.

If you’re struggling to come up with a down payment, the good news is there’s help out there. Roughly 87% of U.S. homes qualify for down payment assistance, according to RealtyTrac. If you look hard enough, your chances of finding money for a home are quite good. Here are five simple ways to save money for a down payment on a home.

1. Use the FHA Bridal Registry Program

wedding

The FHA wants to help you save. | Joe Raedle/Getty Images

Receiving money from family is great, but if you’re applying for an FHA loan, there are some hoops to jump through when it comes to applying gifts toward a down payment. Gift funds must be properly sourced. This means you’re required to document your relationship between you and each giver. The giver has to show where they got their funds and then write a letter stating the money is a gift, not a loan. That’s right, this arduous process must be followed for every gift. The FHA Bridal Registry program, however, offers a flexible way to apply gifts toward the purchase of a home.  

What to keep in mind

woman putting coin into piggy bank

You’re allowed to use funds from friends, neighbors, and whomever else want to give a gift. | iStock.com/dolgachov

It’s not necessary to get married to be eligible for the FHA Bridal Registry Program. This program allows both couples and individuals to open a down payment registry account with a lender so they can deposit cash from anyone who wishes to contribute. So you’re allowed to use funds from friends, neighbors, and whomever else wants to give a gift. Down payment gifts aren’t restricted to just close family members. You can get more information by calling 800.225.5342 or visiting the U.S. Department of Housing and Urban Development website.

2. Explore the Hardest Hit Fund

human palms on all sides of a cut out house diagram

Your state might be able to help you save for a down payment. | iStock.com/danr13

If you’re a resident of California, Florida, Rhode Island, Tennessee, or Kentucky, and you’re a low- to middle-income homebuyer, you might be eligible for the Hardest Hit Fund. The states mentioned above, in addition to a few other states, have money available to assist homebuyers with making a down payment (the fund also offers financial assistance to homeowners who are struggling with mortgage payments).

What to keep in mind

Realtor giving keys and documents

If you’re interested in applying for help through the Hardest Hit Fund, you’ll have to act fast. | iStock.com/JackF

The early bird gets the worm, especially when it comes to government programs. If you’re interested in applying for help through the Hardest Hit Fund, you’ll have to act fast because the money won’t last forever. States have until 2020 to use money set aside for this special program. Visit the U.S. Department of Treasury website to see if you live in a state that participates in this program and to learn more about eligibility guidelines.

3. Use an Employer Assisted Housing Program

Woman working in the office

Your workplace can be a great source of down payment help. | iStock.com/Poike

One place you might not think to look is your employer. However, your workplace can be a great source of down payment help. Some employers offer down payment assistance to employees as part of their benefits package. For example, colleges, universities, and state or local governments often have programs in place to assist with a home purchase.

What to keep in mind

man working

Talk to your human resources representative. | iStock.com/gpointstudio

Talk to your human resources representative to learn whether down payment assistance is available. In the future, if you find yourself back in the job market, consider asking for down payment assistance when negotiating your package. Also do some legwork to see if there are any sources of down payment assistance you may have overlooked. One source is Downpayment Resource. Just type in your address or city, annual income and the number of people who live in your household. You’ll then get a list of programs you might be eligible for.

4. Get help from family

family

Instead of traditional birthday, graduation, or other special-occasion gifts, ask family for money for your down payment. | Source: iStock

Start your search for down payment funds by taking inventory of resources that are most readily available to you. Don’t forget that family members can be a great source of not only social but also financial support. Instead of traditional birthday, graduation, or other special-occasion gifts, ask family for money for your down payment. Chances are, they’ll be more than happy to help.

What to keep in mind

pile of letters

Lenders will require each giver to write a letter stating that the money given to you was not a loan, but a gift. | iStock.com/czarny_bez

Remember to ask your family members for gift letters. Lenders will require each giver to write a letter stating that the money given to you was not a loan, but a gift, and that no repayment is expected. The gift letter should include the donor’s contact information, your relationship, the amount of the gift, the date funds were transferred to you, and the address of the property you wish to buy. Ask your lender for details, however, as each lender might have different requirements when it comes to the letter’s content.

5. Get a side job

young business man

Roughly 29% of workers have a side job. | iStock.com/warrengoldswain

If you’ve ever thought about taking on a second job, now is the time to act. Saving up for a down payment can take some time, so having an additional income source can help speed up the process. Roughly 29% of workers have a side job according to a recent CareerBuilder survey. When it comes to millennials, that number is even higher. Approximately 44% of those ages 25 to 34 are working at a side gig. This is in comparison to 39% of 18- to 24-year-olds, 29% of 35- to 44-year-olds, 22% of 45- to 54-year-olds, and 19% of those ages 55 and older.

What to keep in mind

man sitting in cafe working on laptop

Don’t let your side gig conflict with your day job. | iStock.com/Halfpoint

Don’t let your performance at your primary job suffer. If you lose your main source of income, you won’t be able to pay for your current residence, let alone a new home, so pace yourself. Although you might be tempted to work harder at your side job so you can earn cash as quickly as possible, you’ll burn yourself out. Get enough sleep, work a reasonable number of hours each day, and take enough breaks. If you find your side gig is conflicting with your main gig, it’s time to cut back.

Follow Sheiresa on Twitter @SheiresaNgo.

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