If you are like many, you dream of owning your own house one day. Having a place to call your own, to decorate and do as you please without getting permission first from your landlord is an awesome thing. There is only one stumbling block that many people face: coming up with the down payment.

The standard down payment for a house (that you plan to live in, not an investment property) is 20%. With the median house price of $294,300 that comes to a whopping $58,860! Now, there are tons of loan options out there that allow you to put less down ñ anywhere from 3.5% for an FHA loan or 4-10% for a conventional loan ñ but there are downsides to these options.

In fact there are really two:

  • First, you have private mortgage insurance, or PMI. This is insurance you have to pay each month until your equity grows to 20%. This is done to protect the lender of you skipping out on your mortgage obligation.
  • Second, you run the risk of going underwater. This is when the value of your house drops more than the amount you put down, forcing you to owe more than what the house is worth. This happened a lot during the housing crisis.

So while it is tempting to only put down 3.5% or $10,600 you are better off putting down the entire 20%. So how in the world do you save up $58,000? Here are 5 strategies that will get you there.

5 Tips For Saving For A House Down Payment


Take a moment to get honest with yourself. How bad do you want to buy a house? If you really want to buy one, then you will be fine with shuffling your spending so you can save more. This means finding ways to cut costs, like reducing your cell phone plan or cutting your cable package down. You have to look at your current spending habits and find places to cut back and put that saved money into your house down payment fund.

Another option is to look at your current housing. How much are you paying for rent? Can you move to another part of town or another town to save on rent? Of course, you have to take into account your personal safety and the added costs of possibly being further away from your job, but you can save a of money going this route.

Track Progress

I can’t stress this one enough. You have to track your progress. If you don’t odds are you will resent the basic cable package or the less trendy apartment you moved into. Update your spreadsheet monthly and see how you are coming closer to reaching your goal. When you see this and get that warm fuzzy feeling inside, stop for a minute and live in that moment. This will help motivate you more to keep pushing ahead.

Find New Ways To Save

We all know the typical ways to save money – stop buying a coffee every day, pack your lunch, stop eating out so much. These are great and you should be doing them, but you also can do more. What I like to do is save my savings. When I go grocery shopping, the receipt shows the amount due as well as the amount I saved from sales and coupons. When I get home, I log into my checking account and transfer the amount I saved into a separate savings account. In my budget, I enter the total amount I spent plus the amount I saved.

Doing this ensures that I actually save the amount I saved. Recently, my grocery store has been sending extra coupons in the mail. I’ve been averaging $30 in savings every week now for the year. That’s over $200 in savings! I know I won’t keep getting these coupons forever, but even before them I was averaging around $10-$15 per week.

You can do this every time you save money on something too so you can jumpstart your house down payment fund.

Find Other Sources of Income

I love saving money, but there is a limit to how much I can save. I still need shelter and food so I can never reduce that spending to zero. But when it comes to earning money, the ability to earn more is virtually unlimited.

Your first step is to look at your current job. If you have been a star performer and can back it up, you need to ask for a raise. Don’t stop at 2-3%, ask for 5%. If you find that you cannot get a decent raise, then you might want to look elsewhere for another job that pays more, or work harder at your current job so you can get that larger raise.

In addition to your job, though, you can earn more money. Consider working a part-time job as well. I know it doesn’t sound like fun, but it is only temporary while you save for your down payment. I would caution you on this: think about the amount you will earn per hour. If you are only going to earn $7 per hour, you might want to look elsewhere.

If you choose to not go with a part-time job, you could look at other odd jobs for income. Let’s say you can sing or do a funny voice. Open an account on Fiverr and charge $5 to sing a birthday song to someone. If you have another talent, look around on Fiverr to see if others are doing it as well. While $5 doesn’t sound like much, you could probably sing 20 songs an hour, which comes to $100! Now we are talking!

Other options include going on Craigslist to find odd jobs or even looking around your apartment and selling things you no longer need or use.

Stay Positive

Finally, you need to stay positive. Saving $58,000 is going to take time. It won’t happen overnight. But you have to stay positive and know you are on track for reaching your goal. This is where the tracking aspect ties in from above. Remind yourself that saving this amount is going to put you onto very solid financial ground going forward.

Not only will you be saving money on interest, but you will also be able to pay your house off sooner because you put more money down.

It will get tough at times and you will question why you are doing what you are doing. But staying positive and looking at the overall picture will help you to realize that saving 20% for a down payment is the smartest move you can make.

Final Thoughts

At the end of the day, trying to save for a down payment can be overwhelming. But you can do it if you prioritize saving over everything else and you find ways to not only save more money but also earn more money. If you can do this and track your progress, you will be living in your own house before you know it. And when that time comes, you can then find ways to pay off your house sooner so you can be completely debt free!