The need to save for a down payment has become one of the biggest hurdles for today’s home buyers.
Faced with rising home prices (meaning a larger down payment is required), plus surging student loan debt, many buyers can barely save at all — let alone enough to buy their dream house.
So what do they do? They get creative. They use apps, seek out the help of friends and family, and flip the script on age-old traditions.
Creative Ways Today’s Buyers Save for a Down Payment
- They’re crowdfunding it. Crowdfunding isn’t just for helping your college buddy get his new brewery off the ground. More and more, people are using sites like GoFundMe, Kickstarter, and YouCaring to raise funds for down payments and home improvement projects. There’s even a crowdfunding site dedicated specifically to down payments now, called HomeFundIt.
- They’re skipping wedding gifts — and asking for donations. Feather the Nest and HoneyFund allow engaged couples to ask for down payment donations (as well as donations for honeymoons, excursions, and other items) in lieu of traditional wedding gifts. Think of it like fundraising meets a gift registry. Instead of china and bakeware, the couple gets cash toward their dream home and can save for a down payment.
- They’re using savings apps. There are tons of apps out there that help you automate your savings — either a set amount every month or portion of your transactions. Some even take your savings and invest them in different portfolios, so your money actually makes you money. Popular app options include Acorns, Digit, Chime, and Mint.
- They’re leveraging round-off programs. Programs like Bank of America’s “Keep the Change” allow you to stow away big bucks without making any real change to your saving and spending habits. The tool simply rounds off your purchases to the nearest dollar, and then sticks that extra cash into a savings account. (Example: You buy gum for 75 cents. It gets processed as $1, and the extra 25 cents goes into savings.)
- They’re adding income through the gig economy. Gig jobs like driving for Uber or Lyft, shopping for Shipt, or running errands for Favor make it easy to add extra income without committing too much time or energy. Increasingly, home buyers are using these easy second jobs to save up cash for their down payments and other up-front costs.
Don’t forget: there are also down payment assistance programs that may be able to help you if you qualify. Contact an Embrace home loan officer to learn about potential down payment programs in your area.