If you’re hoping to buy a home in the near future, especially if it will be your first time buying a home, you may be wondering how you’ll be able to come up with the down payment. In many cases, it’s best to put at least 20 percent down on your new home. However, for many people, this number would take them years and years to reach on their own. Luckily, there are a few things you can do or try to help you get the money together sooner. To show you how, here are three ways you help you save more for a down payment on a home loan.
Pick A Realistic Timeframe
Before you start saving, it’s good to have at least some type of idea for how much you’ll want to save and how long you’ll have to save it. Depending on the price of the home you’re looking to buy, the actual amount you’ll want to save will vary. Just keep in mind that the shorter your time frame is for wanting to buy your home, the sooner you’ll have to save the money, which means putting away a big chunk each month. So to help you maintain your sanity and some semblance of your normal life, Kevin Mercadante, a contributor to Money Under 30, suggests trying to pick a realistic time frame, like five years. This will allow you the time you need to save up such a large amount of money without putting a ton of stress on you and your budget.
Invest Some Of Your Savings
Once you’ve started saving and have accumulated a little bit of cash, you can now look for ways to make that money grow at an accelerated rate. One way to do this, according to Wendy Connick, a contributor to CNN Money, is to invest in the stock market. If you’re able to take part of your savings and make a few smart investments, you could see your money grow exponentially. But to be safe, try not to invest more than about 25 percent in the stock market, as you don’t want to lose all your savings if the stocks you choose don’t go the way you’d hoped.
Consider Using Your IRA
To get a large chunk of money fast to help build up your down payment, Kay Bell, a contributor to Bankrate.com, suggests tapping into your IRA. People can often withdraw about $10,000 from an IRA account as a first-time home buyer to help build up a down payment. This can be done for each person. So if you’re buying with your spouse and you both have IRA accounts, you can get about $20,000. While there are some rules, regulations, and taxes that may apply, this could be a good option for those struggling to scrape the cash together for their down payment.
If you’re unsure how you’ll be able to get a down payment saved for a home, consider using the tips mentioned above to help you find a few solutions to this problem.