Side Hustles to Help you Save for a Down Payment
Affording your monthly mortgage payment is just part of owning a home. Most homebuyers also put down a down payment, which in turn helps make that mortgage a bit more manageable.
The down payment you’re responsible for is dependent on which type of loan you choose.
A 20% down payment is something mortgage lenders like because it ensures you’re more invested in the property. However, it’s not always attainable.
In reality, you could be looking at as little as 3.5% down, or even 100% financing.
Just because you’re not using the money as a down payment doesn’t mean it won’t cost you later on, though.
That’s why some people get extremely creative when it comes to earning extra money for a down payment.
- Freelancing or getting a part-time job
- Pet sitting
- Using a fundraising program
- Cutting back on unnecessary weekly/monthly expenses
It may take some time to raise the money you need this way, but it’s always an option if you’re tight on cash.
There are several other simple ways to come up with a down payment that you may not even be considering.
- Start saving now!
- Have more taken out of your paycheck
- Get help from the seller
- Accept a financial gift
- Use your retirement
Set aside some savings
It may be easier said than done, but you may want to consider putting away a little money every paycheck and stashing it in a savings account. You’ll earn a little interest, plus you won’t be so likely to spend the money.
You can even make it easy on yourself by directly depositing part or your paycheck into your savings account every pay period.
Change your withholding
If you’re having a hard time saving on your own, you can always change your withholding on your W-4. Your employer withholds more out of your paycheck in this situation, but you don’t have to worry about spending it because you won’t even see the money until you do your taxes.
One downside, of course, is that unlike putting the money into an actual savings account over time, you won’t be earning any interest.
Talk to the seller
Sometimes a seller is willing to make a deal, including giving you a down payment in the form of credit. Of course, be sure to talk with your lender first to make sure you’re following all the rules if you do go this route.
Accept a gift
You can accept a certain amount of money for a down payment from family members without being penalized. While you may have to prove the money is a gift and there is a limit you can’t go over for tax reasons, it is one option to consider.
Use your retirement funds
You can also consider tapping into your retirement funds. Specifically, you may be able to borrow from your 401K. Sometimes there are limitations, so be sure you understand what it means ahead of time.
Of course, there are some situations where you may not need to worry about a down payment at all.
No down payment, no problem!
- Use 100% financing
Not everyone qualifies for a 100% loan, but you may be able to knock down your down payment by taking out a second mortgage.
As with anything, the key is to be creative. Afterall, the reward of homeownership is certainly worth it in the end.