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Simple steps to help you save for a down payment.

So you are ready to claim your castle…but you must first slay the dragon - the dreaded Down Payment.


This is possibly the largest expenditure you have yet faced in your life. Fret not! There are many ways you can prepare to meet this challenge.

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Step 1: Determine how much you need, and set the target.

Dream Home Price x Percent Down = Down Payment Target

A very popular method to save funds is to allocate a set amount of your income into a separate savings account. This account will be strictly for the down payment, and you must refrain from using these savings for any other purpose. Over time, you will be surprised at how much you will have accumulated! You can even try looking at high-yielding savings accounts if you want your savings to get a little boost. These are mostly online, but they are easy to access and easy transfer funds to. These high-yield accounts generally offer between 1.50 % and 2.0 % interest, which is significantly higher than the rates offered by traditional banking institutions. Let’s look closer at this range to see how much interest you would earn after 1 year, if you contributed $100 per month towards savings:

$100 / Month x 12 Months x 0.015 = $18
$100 / Month x 12 Months x 0.020 = $24

Remember, the more you contribute, the more interest you will earn!

Step 2: Limit Expenses.

There are many ways you can try to limit your expenses while you save for the down payment. You can review your current expenses and see what can possibly be eliminated, or at the very least reduced. Also, while we all enjoy the little things in life that we’ve grown used to, like morning coffee from the local café, or ordering take-out, consider putting some of those on hold for a little while - it will definitely be worth it. You may even take it a step further and turn your annual vacation into a “Stay-cation”. With the world going digital, there are plenty of ways to maximize your fun in the comfort of your home, whether it is enjoying your favorite shows and finding new movies on streaming services, or ordering all sorts of foods for delivery! It is also not a bad idea to evaluate your credit card debt; if you have a big balance, you will want to pay that down first, as it may impact your ability to get a better rate on your mortgage.

Step 3: Re-allocate Existing Resources.

Another route you can take is by selling some of your other investments, if you feel comfortable doing so. While we aren’t advising you pull all your money from your 401k, this is actually not as drastic an approach as you might be thinking. Consider it this way - you are simply shifting from one investment to another, and in this case, the new investment is your home! You will build equity by paying down the mortgage and over time, and historically the value of the home will increase. In turn, the return on your investment will increase as well.

Step 4: Consider new avenues for income.

It might sound challenging, but you can consider taking on a second job temporarily. The additional earnings can prove to significantly supplement your savings!


  • If you enjoy driving or meeting new people, you can pick up some hours driving Ubers or Lyfts or working for a delivery service. 

  • You can find remote jobs to do from your computer at home, such as customer support roles, data entry, product reviews, and various freelance jobs. There are more hourly opportunities out there than you think.

  • Alternatively, you can try and pull in more money from your current job by temporarily decreasing your retirement contributions. If you end up doing this, make sure that you increase your contributions again once you have met your down payment target!

It will seem like an uphill battle at first, but if you can commit to saving more money and lowering your expenses, you will be very well on your way to defeating this Dragon and settling into your castle!
Good luck from all of us at HomeGrade!

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