How to Save Money for a Down Payment

One of the biggest challenges we see in this industry is first-time homebuyers struggling to save money for a down payment. Here are a few tips we’ve picked up along the way that we hope you find helpful.

Make Savings Automatic

The first and most effective tip we can offer is to make your savings automatic. You have two ways to do this.

#1: You can keep having your entire paycheck hit your checking account – that’s fine. But the next step is setting up automatic transfers to have some money sent into your savings account every few weeks.

#2: Most employers allow you to allocate a portion of your paycheck into a savings account. Change your allocations, that way you never even see it hit your checking. It will be out of sight, out of mind.

The reason why automatic savings works is because it eliminates the human element. Everyone is busy these days, so it’s easy to forget to do things…. Like transfer money into your savings. Just have a computer do it instead.

The other thing is, it makes you allocate the money towards your down payment before it gets spent on something else! Which brings me to my next point.

Find Ways to Cut Back

Nobody likes to budget, but it’s important. You don’t need to track every penny for the rest of your life, but it is a good habit to understand the general buckets of where you’re spending your money.

For example, how much money did you spend getting takeout this month? How much on entertainment? Did you buy any new clothes or shoes? Did you travel anywhere and stay in a hotel?

We’re very blessed to live in a wealthy country, so most of us tend to spend money on these nonessentials. Think about which of these things are the least important to you and how you can scale them back.

For example, maybe you currently get takeout three times a week. Drop it down to just 1-2 times a week and increase your automatic savings accordingly.

Maybe you love shoes – a lot of people do – and you buy about two new pairs every month. Again, consider dropping it down to just one new pair per month and banking the money towards your down payment.

Don’t think of this as a sacrifice. You actually aren’t really sacrificing anything. Instead, you’re doing a tradeoff. You’re trading those extra shoes or takeout for a house!

Consider Earning Extra Money

If you’re an adult, you can make extra money on the side. There are hundreds – probably thousands – of ways to do it.

  • Do outdoor work like blowing snow or cutting grass
  • Sell stuff on Etsy
  • Buy things for a discount at thrift stores or garage sales and sell them on eBay
  • Get paid to watch or walk people’s pets
  • Find babysitting gigs on

You have lots of options. Just make sure you put this extra money in the right place – towards your down payment! It doesn’t get you any closer to your goal if you make an extra $500 a month then spend it on a new TV.


Saving for a down payment is tough. For more advice, or advice on any questions you have about the home buying process, just let us know! Send us an email at and we’ll get back to you soon.