31 Ways to Save for Your Down Payment

There’s a meme going around that says something like, “I unsubscribed from Netflix and have been packing my own lunch; should be able to afford a house any day now!” This is exactly the type of zinger that resonates with today’s generation of homebuyers. Home prices are at record highs, and factors like student loan debt, salaries not keeping pace with inflation, and high rent prices all make saving for a down payment really difficult.

To put it another way? It’s passé (and laughable, really) to tell anyone that skipping an iced coffee run here and there will magically translate to a down payment fund in this unprecedented market. But if you are looking to put some money aside for a down payment, here are 31 smart strategies that can help — one for each day of the month — and none of which are a cliché attack on avocado toast.

1. Save your tax return (and other windfalls).

If you’re getting a tax refund, stash it away in savings or use it to pay down any high-interest debt (which can be the archnemesis of savings!). You can also plan to put away any other money that comes your way, like one-time performance bonuses at work.

2. Spend your credit card rewards.

If you have cash-back rewards, sign-up bonuses, or any other credit rewards sitting on your card, consider cashing them in as statement credits to pay off your balance and free up money for savings. Or, cash them out and transfer them to savings directly.

3. Round up your purchases.

There are more apps than ever before that can give you control over your finances and encourage savings. Set up automatic deposits, or use a banking app that allows you to round up your purchase to the nearest dollar. Bank of America has a “Keep the Change” savings program that rounds up to the nearest dollar when you make a purchase, transferring the change to your savings account. Or, an app like Acorns will invest your spare change.

4. Crowdfund.

When your birthday or the holidays roll around, family and friends can contribute to your down payment fund on sites like HomeFundIt. Some couples are asking for down payment contributions instead of gifts at their weddings.

5. Consider savings bonds.

For example, the Series 1 Savings Bond is currently offering 7 percent interest, which is much higher than any other savings account on the market. 

6. Limit your spending to one day a week.

Choose one day per week that you will do your grocery shopping, and any other shopping. This will help you practice money mindfulness and eliminate impulse spending.

7. Name your savings account.

Some banks will let you name certain accounts, which can be motivating to see money piling up in your “First Home Fund.” 

8. Find a money buddy.

Find a friend who is also working on a savings goal, and hold one another accountable. Financial goals, like fitness goals, are easier to achieve if you have someone in your corner rooting for you.

9. Flip furniture.

If you own a van or truck, there is a good chance you can make some extra money to save by finding used furniture, cleaning it up, and reselling it. There is a constant stream of used furniture being sold on Facebook Marketplace, Craigslist, and other local classified services. 

Spending a little time every day going through the listings can be a great way to find great deals that you can clean up. With a little elbow grease and knowledge, you can take scruffy furniture and resell it for hundreds more than you bought it for.

10. Continue “paying off” your debt.

Say you recently paid off your credit card, car loan, student loans, or other type of debt. Figure out what you were paying toward that debt each month, and automatically transfer it to your savings. The theory is “if I lived without that money before, I can continue to live without it.”

11. Consider changing up your cell phone plan.

A recent study found that 90 percent of mobile users waste money on unnecessary unlimited data plans and use much less than what their plans allow for. You could consider switching to a lower-tiered data plan or go with an online carrier like Mint Mobile, which offers plans for as little as $15 a month. 

12. Hack your insurance bill.

When was the last time you checked the price of your auto insurance policy? Chances are, you shopped around for the best price when you first purchased your car; but have you reevaluated your payments? You can use sites like The Zebra to find cheaper insurance options and potentially lower your bills, freeing up money for savings.

13. Rent out your car.

There are some surprising things you can rent out, such as your car that sits idly in your driveway (especially if you work from home) via sites like GetAround.com. This can be especially lucrative because rental car demand has been high and people are looking for alternative options. Another idea if you live in a major city, rent out your parking spot via SpotHero.

14. Or, turn your car into a billboard.

If you commute to work, you can have your car transformed into a billboard with companies like Carvertise. Wraparounds pay the most, but if you want something more subtle, some companies also offer back window advertising. 

15. Refinance your debt.

Once you have a mortgage, you’ll probably be keeping tabs on interest rates to see if you should refinance. But did you know you can also refinance other debts, like your auto loan or student loans, especially if you have good or excellent credit? Any money you save on interest can be re-routed into your down payment fund.  If you regularly use credit cards and have a great payment history, call the credit card company and request a lower interest rate. 

16. Get cash back on purchases.

Think about how you can turn your everyday essential needs into extra home down payment savings. For instance, you can earn cash back on groceries and take out orders by using sites like CouponCabin or Rakuten and funnel those savings into your down payment account. 

17. Use one streaming service at a time.

Just about every network and niche has a streaming service these days. So, if years ago, you cut your cable bill thinking you’d be saving money, you might want to take a second look at how many services you’re subscribing to now. In addition to the big names like Netflix, Hulu, and Disney+, there’s also Shudder for horror films and BritBox for British shows. If you’re the type who likes to binge watch a show, it might make more sense to switch streaming services by the month to sync up with the shows you want to watch. 

18. Open a CD.

The benefit of a certificate of deposit (or CD) is that it typically offers a slightly higher rate than savings accounts or money markets. But, you’ll want to make sure you’re able to access your cash within the period that you’ll need it for your down payment, as the money you put in these accounts is generally inaccessible for the term (which varies, but can be a year or more) unless you pay a penalty.

19. Create purchase hurdles.

A survey from Slick Deals found that Americans spent $183 per month on impulse purchases in 2020. You can curb shopping temptations by implementing a few purchase hurdles, like deleting payment and shipping details that are stored in retail apps and accounts, shopping with a set amount of cash, and unsubscribing from store email lists (the better not to tempt you!).

20. Get a side gig.

The fastest way to save more is to earn more! These days there are plenty of flexible side hustles that you can take on in your spare time. For example you can pet sit via Rover, run deliveries for Postmates/GrubHub/UberEats/Instacart, or offer virtual tutoring via Varsity Tutors.  

21. Research first-time buyer programs.

Set aside some time to look into local and state first-time home buyer programs, many of which offer down payment assistance. There might be income or geographic requirements, but getting a grant, forgivable loan, or a low-interest loan can go a long way to building your down payment funds. Also, it doesn’t necessarily have to be your first time buying a home — some programs tend to define “first-time home buyer” as someone who hasn’t had ownership in a home in the past three years.

22. Boomerang.

If you have family that are willing to help support you by letting you live with them, go for it! It's an option that might not be for everyone, but saving even one year’s worth of rent money will pump up your down payment fund much more rapidly than cutting smaller expenses.

23. Pause or lessen your retirement contributions.

If you’re putting a large chunk of your salary into retirement savings, you can consider temporarily shifting that money to a home savings account for a few months. First-time homebuyers can also withdraw up to $10,000 from an IRA without penalty for a down payment. Be sure to consult a tax specialist before withdrawing retirement assets. You may also want to work with a financial advisor to come up with a risk-appropriate strategy that aligns with your home-buying timeline.

24. Take on a roommate.

If you live in a city where rent prices are already super expensive (looking at you, New York and San Fran), you may already have a roommate or multiple roommates. But for those who don’t have roommates, the perks include not only splitting rent, but other household bills. If you end up finding you like the roommate lifestyle, you can consider house hacking once you purchase your home — which is essentially renting out a room, half of a duplex, or basement to help cover (or in some cases, entirely cover) your mortgage. 

25. Sell items you don’t use.

These days, you don’t have to have a garage sale to unload things you no longer want. You can put household items, furniture, clothes, or electronics up on sites like Facebook Marketplace, OfferUp, Poshmark, and other sites.  As a bonus, when your moving day comes around, you’ll have less to move!

26. Ask for a raise.

If you haven’t received a raise recently and feel confident about your performance, go for it! The good news: many companies are setting aside about 4 percent of their payroll budgets for raises this year. Any extra money you get, you can automate into your savings. 

27. Use your FSA account.

If you’ve got a Flexible Spending Account — and you don’t want to risk losing money set aside in it for healthcare — you definitely should know about all of the items that you can spend it on and stock up. I’m talking sunscreen, First Aid care, motion sickness aids, lip balm, eyedrops, condoms, contact lenses, and more. Because you may need to tap into your FSA account during the year, it’s a good idea to wait until the end of the year to make extra purchases. Walgreens has a comprehensive list on what’s FSA eligible with and without a prescription.

28. Boost your credit score.

The higher your credit, the less it costs to borrow money. Not only does that mean you’ll get a lower interest rate on a mortgage, but it may also give you the bargaining power you need to lower the APR on your existing credit cards or save money on your car insurance. Here are some small, easy ways to build your credit.

29. Try “no-spend” months or periods.

You may not want to permanently give up things like dining out for the entire time that you’re saving for a down payment; but you could identify certain categories of spending and freeze your spending on some non-essentials like delivery meals for a month, or a pricey vacation for a year. 

30. Audit your subscriptions.

People pay on average $237.33 a month for their subscriptions, according to consumer research, which is nearly 200 percent more than they estimate spending when they’re asked on the spot. You may have some recurring charges hitting your bank account every month for services you’re no longer using.  Monitor your monthly bank statement to see what subscriptions you might have and consider paring down what you might not need/use. 

 31. Get a library card.

Not only are libraries stocked with books, but many also have items you can borrow like tools and kitchen gadgets — as well as discounted museum and theme park passes — that will help you curb big-ticket purchases. 

Originally Published at Apartment Therapy: https://www.apartmenttherapy.com/31-ways-save-for-down-payment-37071641

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