3 proven ways to save for a down payment faster

Saving for a down payment can be one of the biggest challenges of homeownership, especially for young people. With rising expenses, family expenses, and multiple financial responsibilities, saving enough money can be overwhelming.

But with some creativity and smart financial moves, you can speed up the process and get the keys to your new home faster than you think. Here are three proven ways to help you save on your down payment. And when you’re ready to take out a mortgage, check out our list of the best mortgage lenders.

1. Take advantage of the rental opportunity

When my wife (and newborn!) and I were ready to buy our first home, we didn’t have enough saved for a down payment. But instead of giving up, I explored the idea of ​​renting or even a rent-to-own agreement with a landlord.

The homeowner didn’t really know what the lease option was, but since her home had been on the market for a year, she was willing to listen to just about anything.

We agreed on an agreement where 50% of my monthly rent payments would go towards the down payment and 50% would go towards rent/leasing. Let’s say I paid $1,000 a month; $500 each month went towards the down payment and $500 was hers for rent.

This approach allowed us to live in the home we wanted to buy while growing our down payment along with it, without having to put all the cash up front. After two years, if I couldn’t figure out the rest, she was able to keep it all. But I did it, and the $12,000 we paid her was all we needed for the down payment.

It was a win-win: in the end, I secured our future home, and the landlord got a reliable tenant with a vested interest in the property.

For buyers looking for a creative solution to down payment challenges, the lease option can be a powerful tool. Not only do you get the opportunity to live in the home you want to buy, but you also have the opportunity to build equity along the way.

2. Put money away in a high-yield savings account.

One of the easiest ways to speed up your savings is to put your money into a high-yield savings account. Traditional savings accounts offer low yields, but high-yield accounts can significantly increase your earnings by allowing your money to grow faster. If you’re serious about making a down payment quickly, moving your savings into one of these accounts won’t be difficult.

For example, if you save $10,000 over two years in a high-yield account with a 4.5% interest rate, you can earn hundreds more than you would in a traditional account while paying virtually nothing. The key here is that your money works for you without any additional effort on your part.

3. Automate your savings

Consistent savings are critical to achieving this big goal, but it’s not always easy. Automating the process helps. By setting up automatic transfers from your checking account to your down payment fund, you can easily build your savings over time. Only 17% of workers choose to set up automatic contributions to help them reach their savings goals, but it can be a big help.

Setting up an automatic transfer of, say, 10% of every paycheck into your savings will ensure that you are constantly contributing to your goal, even when life gets hectic. This method makes saving a priority even in tough times, eliminating the temptation to spend money elsewhere.

By using strategies like these and shopping around for the best mortgage rates, you can reach your down payment goal faster. And when this happens, the child cries in the corridor. your home may be very close!