These savings tips can help you build up a down payment this year

If 2023 is the year you’re determined to become a homeowner, then it’s time to get serious about saving for a down payment. One of the best ways to prepare for the financial commitment of becoming a homeowner is to incorporate saving a down payment into your existing budget. Many banks require at least 20% down to get a loan without private mortgage insurance. If you can’t save up to 20% down, you’ll have to secure a loan with private mortgage insurance and a smaller down payment to protect the lender in case you default on your payment.

The good news is that saving up a 20% down payment doesn’t have to be your goal. A variety of home loan products and tools can enable you to become a homeowner faster without the 20% down. For example, USDA home loans are available with lower down payment clauses if you plan to buy in a rural area. FHA and VA* home loans are also viable options for many first-time home buyers. But, even if you choose a loan with a smaller down payment clause, it’s still important to begin saving money for other costs, such as closing costs, repairs, or additional fees. So how can you do it? We recommend exploring a few of these methods to help you save this year.

• High-Yield Savings Accounts: High-yield savings accounts are a smart way to make your money work for you while saving. Typically these accounts pay more interest than a typical savings account and are offered by online banking institutions. Make sure to thoroughly research your options for high-yield accounts to find the best fit for your needs.
• First-time homebuyer savings account: Many states or banking institutions also offer first-time homebuyer savings accounts. These accounts are specially designed to help prospective homebuyers save up for the down payment and other homeowner costs. Look into the options available in your state or your bank to see what works best for your needs.
• Investments: Another option is to use investment account proceeds to fund your down payment savings. We recommend working with a qualified financial institution or financial planner if you are going this route to ensure that you are making wise and safe financial decisions.

Focus on your budgeting to boost your savings
No matter which savings options you choose to utilize for homeownership, the most important thing you’ll have to do is follow a budget and save. You’ll need to know where your money goes each payday and set aside a specific amount for your savings needs. One tip we recommend is that while saving for a home, create a budget that would incorporate all your expenses as a homeowner, like home insurance, property taxes, utilities, etc. Then, pay that money into your savings account to build up your down payment. When you prepare this way, you’ll already be ready for the additional expenses of owning a home and have room for them in your budget.

Saving for a down payment on your future home is a big task. Remember, there are lots of options available to help you become a homeowner without a large down payment. Our loan advisors can help you figure out the financing to help make your homeownership dreams come true now instead of later. So call today and make an appointment to see which options are best for your needs. (360) 903-7890

*VA home loan purchases, have options for 0% down payment, no private mortgage Insurance requirements, competitive interest rates, with specific qualification requirements. VA Interest rate reduction loans (IRRRL) are only for Veterans who currently have a VA loan, current loan rate restrictions apply, and limits to recoupment of costs and fees apply. VA Cash-out Refinances are available for Veterans with or without current VA loans. Policies and guidelines may vary and are subject to the individual borrower(s) qualification. Program and Lender overlays apply.