4 Ways to Save a Down Payment in 12 Months

Chances are you don’t have a hefty down payment in your account to buy a home on a whim. Yet, with a few tips, you can save a down payment for your home in just 12 months.

First thing’s first, you have to factor in more than the down payment itself. From closing costs to insurance, the numbers will quickly add up. CNNMoney’s Home Affordability Calculator is a great resource for getting a quick, ballpark amount. However, it’s crucial to meet with a financial advisor to assist you in finding out how much you can afford once you factor in your spending habits. 

Once you’ve done your homework, you can have a starting place to put these four ways into practice for saving for a down payment in 12 months.

1. Cut your rent.

Your monthly rent payment is likely the largest portion of your budget. Sharing expenses with family members or friends is a great way to decrease your rent. Either by moving in with others or adding a roommate can save you bundles. Even saving as little as $100 on your monthly rent can save you up $1,200 in a year to put toward your down payment. 

2. Differentiate between ‘needs’ and ‘wants.’

Saving for a down payment in 12 months will require an assessment of your spending habits to establish your ‘needs’ and ‘wants.’ For instance, if you live in a city with public transportation, you don't need to drive. Save money on gas and take a bus. If you live close to your work, try biking or walking more. If your household has two cars, you may even want to ditch the extra car to help you save and pocket the amount from selling it. 

3. Minimize extra expenses.

Sure, this seems like a no-brainer, but you’ll be surprised how much you can save for a down payment on your home by cutting out extra expenses. Making your own lunch for work instead of going out to a restaurant, brewing your own coffee or exercising at home versus a gym are just a few ways you can save. Entertainment is another category that can be cut. For instance, rent a Redbox for a couple dollars instead of going to the movies and ordering popcorn and soda. 

4. Get a second job.

While this is certainly the least enticing way to pocket extra cash, a second job can give you the extra boost toward meeting your goal. Just keep reminding yourself that this second job is only for a season!