Finding the money for that first home can be a challenge. Without at least 20 percent to put down, most lenders will require that you purchase mortgage insurance that will increase your monthly payment for years (until you’ve built up enough equity to equal that 20 percent). Fortunately, there are a number of creative ways you can find the extra money you need to buy the house of your dreams.
- Find a side gig.
There are scores of ways to earn a little extra every week. Write articles online for platforms like Scripted, Crowd Content and WriterAccess. Mow lawns in the evenings after your day job. Start a small business, such as a dog-walking venture or a direct sales business with companies like Mary Kay, Tupperware and the like.
- Clear out your attic, garage or closet.
You’re likely going to need to clean out those areas when you move anyway. Why not get a head start and use the money you raise from listing your unwanted furniture, collectibles and household items on Craigslist, eBay or Facebook Marketplace. You’d be surprised how much your “clutter” is worth.
- Borrow from yourself.
Why borrow from friends or family members when you may be able to borrow the money you need from your own 401k or IRA account? You can borrow an unlimited amount from your 401k and up to $10,000 (or $20,000 if married) from your IRA for a first time home purchase.
- Pay down your credit card debt.
If you carry one or more credit card balances from month to month, you could save a significant amount by reducing your balances and/or paying the entire bill off. The 15 to 30 percent in interest you pay each and every month could go a long way towards the amount you need for your down payment.
- Set up automatic savings.
Yet another easy way to get that 20 percent down payment is to set your savings on autopilot. Most employers will direct deposit a specified amount of every paycheck into your savings account. That way you won’t be tempted to spend it before you make it to the bank to deposit it yourself. In addition, there are apps, such as Acorn, that invest the “spare change” from your credit card purchases automatically.
Consider a lease-to-own home, such as those offered by Experience Homes. You can save for your down payment while you are already living in and building equity in your home. For more information, please see our Lease Option Path page.