15 Ways to Save for a Down Payment on a House

Have you always dreamed of owning your own home? It’s not an uncommon goal. But one of the greatest challenges is saving up enough for a down payment.


Does this mean you’ll have to wait several years to buy a home? Not quite. Read on to discover the best ways to save up for a down payment.

How to Save for Down Payment on a House

Before you begin saving for a down payment on a house, you need to know how much house you can afford. There are several things you will need to plan for. Your monthly mortgage payment will include the following:

  • Mortgage principal and interest
  • Real estate taxes
  • Private mortgage insurance (PMI)
  • Homeowners insurance
  • Homeowners’ Association (HOA) fees, if any.

You will also have closing costs and possibly moving expenses.

Furthermore, remember that for a conventional mortgage, you’ll typically need to save up to 20% of a home’s purchase price for a down payment. That means you’ll likely need to come up with tens of thousands of dollars.

1. Make a Plan

Making a plan can be helpful in saving money, even if you are unsure of where the funds will come from. It allows you to set a timeline for reaching your savings goals and helps to keep you motivated. Additionally, having a plan can help you track your progress and make measurable progress towards your financial goals.

To illustrate, if you need to save $6,000 in 12 months for a down payment, you must find a way to come up with $500 each month.

Some may be able to do this by cutting a few expenses. Others may have to get creative and find other ways to earn money. Either way, breaking it down into small chunks makes meeting the goal a lot more workable.

So, start by figuring out how much you need, come up with a plan, and execute. And remember that discipline is a must. If you have the right mindset and commit to the plan, you’ll be closing on your new home in no time.

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2. Prepare for the Unexpected

Life happens, and sometimes those unexpected occurrences can wreak havoc on your finances. This makes it near impossible to achieve your savings goals. But you can cut the chances of this happening by creating a safety net before you start saving for a down payment. That way, your dreams of buying a home won’t crash and burn if a financial emergency comes up.

3. Pay Yourself First

Have you ever tried saving money at the end of the month only to have your plans go up in smoke? It usually goes a little something like this: you make a budget for the month and vow to follow it line by line. And whatever is remains at the end of the month gets deposited into your savings, CD, or money market account.

Sounds good, but that’s not typically how it goes. A more realistic chain of events: you create a budget and all is well until life happens. By the end of the month, your wallet is empty and you’re awaiting the next paycheck.

We’re talking about saving up thousands of dollars for a down payment fund. For this reason, you want to save money at the beginning of the month or pay yourself first. This ensures a busted budget doesn’t get in the way of saving up for a down-payment on a home.

4. Start a Side Hustle

Starting a side hustle can be a great way to earn extra money and save for a down payment on a house. If you have a particular skill or talent, you may be able to offer your services as a freelancer or independent contractor. This could include writing, design, photography, or any other service that you have experience in and can offer to others.

You might also consider starting a small business on the side, such as selling handmade crafts or offering a service like pet sitting or tutoring. This allows you to diversify your income streams and potentially increase your overall earning potential.

5. Make It Fun

Did you discover a brand-new savings challenge at the beginning of the year? You don’t have to wait until the new year to partake in the fun. Put a savings challenge in place now to help accomplish your goal. A few ideas:

  • Gather a group of friends to join in as you embark on the challenge. You can come up with some sort of small incentive to award the person who reaches their target goal the fastest. Even if you don’t win, having that sort of accountability will help reach your goals faster.
  • Keep the change. You won’t get very far saving coins from transactions. But committing to saving every $1 or $5 bill could be effective. (This approach is most effective when you only use cash for everyday transactions).
  • Commit to no-spend days. Pick one day of the week to not spend a single dollar (unless it’s an emergency).
  • Rotating spending category months.
  • Use financial windfalls wisely. If you receive an unexpected financial gift or a lump sum of cash, put it in your down payment savings account.
  • Participate in a 52-week challenge with weekly increases. You don’t have to wait until the first of the year to get started. Start on your next payday and stretch it out for an entire year.

6. Look at Your Budget

When was the last time you took a close look at your budget? If it’s been a while, you may be wasting money on items or services that are no longer needed or beneficial to you. Or you can stand to reduce some expenses and reach your savings goal faster. Some tips to cut costs:

  • Bundle cable, internet, and phone services or cut them altogether.
  • Request a free energy-audit to identify problem areas in your home.
  • Increase the deductible on your insurance policies to decrease premiums.
  • Create weekly meal plans to decrease grocery expenditures.
  • Ditch eating out for home cooked meals.
  • Use coupons and shop for bargains.
  • Avoid impulse spending.
  • Downgrade your cell phone or opt-in for a low-cost prepaid plan.

7. Get a Roommate

Having a roommate can be a great way to reduce your living expenses and free up more money to put towards a down payment on a house. By sharing the cost of rent and other expenses, you can significantly reduce your monthly expenses and save more money each month.

Additionally, if you are able to find a roommate who is willing to pay more than their share of the expenses, you may be able to increase your overall income and save even more.

8. Boost Your Income

Worried about stretching yourself too thin from your savings plan? Explore other ways to boost your income, so your efforts won’t interfere with your budget. Some ways to pull this off:

  • Work overtime to earn some extra cash.
  • Ask for a raise if it’s been awhile and your latest evaluation was stellar.
  • Get a part-time job and work when you have spare time.
  • Find odd jobs on Craigslist.

9. Sell Your Unwanted Stuff

Selling items that you no longer use or need can be a good way to raise extra money to put towards a down payment on a house. Here are a few ideas for items that you might consider selling:

  1. Clothing and accessories: Do you have clothes, shoes, or accessories that you no longer wear or that no longer fit?
  2. Home decor and furniture: Do you have furniture or home decor items that you no longer need or that no longer fit your style?
  3. Electronics: Are there any electronic devices that you no longer use or need, such as an outdated phone or laptop?
  4. Books, CDs, and DVDs: Do you have a collection of books, CDs, or DVDs that you no longer want or need?
  5. Collectibles and antiques: Do you have collectibles or antiques that you no longer want or that you think may be worth a lot of money?

Consider selling these items through an online consignment shop or online marketplace like eBay or Craigslist.

10. Refinance Existing Loans

Are you paying too much in interest for your current debt obligations? The only way to find out is by reaching out to your lenders to determine if you’re eligible for lower interest rates.

If not, consider refinancing your loans, especially student loans, to lower the monthly payment and free up funds to go towards your down payment. (Keep in mind that extending the loan term could mean more interest paid over the life of the mortgage loan unless the new interest rate is lower).

11. Consolidate Your Debt

What about credit card debt with exorbitant APRs that are costing you a fortune? Explore debt consolidation options to determine if you qualify for a loan with a competitive rate. By going this route, you could shave hundreds off your monthly expenses, and pay off the credit cards much faster while saving for a down payment on a house.

12. Automate Savings

One simple way to boost your savings is by setting up an automatic deposit from your paycheck. By transferring a predetermined amount from your checking account into a high-yield savings account on a regular basis, you can watch your savings grow over time. This way, you don’t have to actively remember to transfer the funds yourself.

13. Explore First-Time Home Buyer Programs

If you are a first-time home buyer working towards the goal of homeownership, it can be helpful to research first-time home buyer programs that may be available to you. These programs may offer assistance with a down payment or low down payment options.

Some examples include Fannie Mae and Freddie Mac’s down payment assistance programs, VA loans, USDA loans, and FHA loans.

By considering these options, you may be able to significantly reduce the amount of money you need for a down payment on a home. It’s worth taking the time to research and see what kind of help may be available to you based on your personal financial situation.

14. Save on Transportation

Consider switching to cheaper forms of transportation, such as biking or public transit, if you live within a reasonable distance from your workplace. This will this save you money on gas and parking fees. It can also improve your physical fitness if you choose to ride a bike.

If you live in an urban area, using the subway or bus as an alternative to driving can also help reduce air pollution and traffic congestion, benefiting both your personal well-being and the environment.

15. Save Money on Your Purchases

There are several ways to save money while shopping, both online and in-store. Here are some suggestions:

  1. Use online browser extensions like Honey or Rakuten to find and apply coupon codes automatically at checkout. These extensions can also alert you to price drops and help you find the best deals.
  2. Look for sales and clearance items, and consider buying in bulk when it makes sense.
  3. Compare prices across different retailers before making a purchase. Websites like PriceGrabber and CamelCamelCamel can help you find the best prices online.
  4. Use cashback credit cards or apps like Ibotta and Dosh to earn money back on your purchases.
  5. When shopping for groceries, try to plan your meals in advance and make a list of the items you need to purchase. This can help you avoid buying unnecessary items and sticking to a budget.
  6. Consider buying generic or store-brand products, which can often be just as good as name-brand items but at a lower price.
  7. Look for deals and discounts, such as buy-one-get-one-free offers or discounts for purchasing a certain number of items.
  8. Use coupons and take advantage of loyalty programs if the store offers them.
  9. Consider purchasing items that are in-season, as they are often cheaper than out-of-season items.
  10. Shop at discount stores or warehouse clubs such as Costco or Sam’s. They often offer lower prices on a wide range of products.

Bottom Line

While it may be intimidating to save for a down payment, you can pull it off if you have a solid plan. It may take a bit longer than you’d like, but the benefits of homeownership will make your efforts worthwhile.

Allison Martin
Meet the author

Allison Martin is a syndicated financial writer, author, and Certified Financial Education Instructor (CFEI). She has written about personal finance for almost ten years and holds a master's degree in Accounting from the University of South Florida.