4 Ways to Save Up a Home Down Payment in 2023

If you’re hoping to buy a home in 2023 or soon after, you’ll need to get to work on saving up a down payment if you haven’t already done so.

Most mortgage lenders do require at least a small down payment, and a larger one of 20% of your home’s value is best if you can make it happen in order to avoid added costs and a higher interest rate.

Saving up a ton of money to put down on a house is no easy task, but these four techniques can help you to make it happen ASAP.

1. Bring in some extra income

If you want to save a down payment as quickly as possible, finding a way to bring more money home is the fastest way to do it. That’s because you probably already have a lot of your current income committed to other things — but anything extra you earn can go right in the bank toward your home purchase.

There are lots of ways to bring in extra money. You can:

• Get a side job
• Ask for a raise or work overtime at your current job
• Sell unwanted items
• Ask your friends and family to commit to a down payment fund for holiday and birthday gifts instead of buying you more stuff

The more techniques you try, the faster you can save up the money needed to move forward with becoming a homeowner. Remember, it’s only for a short time, so it may be worth doing that extra work.

2. Practice making your mortgage payment

If your mortgage payment (and other housing costs) are going to go up after you move, you can save some extra money by “practicing” for your higher payment.

For example, say you’re paying $1,000 a month in rent and will pay $1,200 after moving to a new home. Since your housing costs will be $200 higher, get used to making the extra payment now by transferring an extra $200 a month into your down payment account when you pay the rent.

Not only will this test run help you grow your account balance for your down payment, but it will also help you decide if your new housing budget is realistic or will be too much of a stretch.

3. Reduce your current housing costs

In anticipation of your upcoming move, see if you can reduce your current housing costs in order to save up more for a down payment. You could do this by, for example, temporarily moving in with a parent or relative at a low rent or even for free (if they’ll allow it).

You could also get a roommate or move to a cheaper place. Even if it’s not as nice, you’ll know it’s temporary — and that the money you’re saving is going toward helping you get into your own home sooner.

4. Slash your budget

Finally, you can take a very close look at your budget and cut everything you can. Again, since this is a short-term temporary move to save for a down payment, it can be easier to sacrifice a lot temporarily since it’s for a good cause.

If you implement these four steps (or as many of them as possible), you should hopefully be able to amass a generous down payment in 2023 — or at least get a good start on doing so.

This article was written by Dana George from The Motley Fool and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected].