After you figure out exactly how much you’ll need for a down payment, these five strategies will help you get there.

1. Automatic savings deposit

The key to saving a little each month out of your paycheck is automatic deposits. If you have the chance to think about it, that amount you’ve decided to set aside for your down payment may instead go toward morning coffees, a shopping splurge, or even something that seems like a necessity in the moment.

Most banks are able to set up direct transfers from your checking account to your savings on a certain date. This means that the moment your paycheck hits your account, whatever amount or percentage you decide will automatically be saved for your down payment. You might miss it initially but eventually, you’ll forget all about it until you check out your fat savings account.

2. Side hustle

If you’re struggling to make your paycheck stretch beyond normal bills and necessities, you may be well served to get creative and take on a side gig — at least for a short time. Since you aren’t used to this extra bit of income, it should be easy to set any extra income aside for your future dream home — in theory anyway.

There are loads of great side hustles out there, even ones that you only have to work when you want. Ride-hailing apps (think Lyft or Uber), food delivery services (like Instacart, Uber Eats, or DoorDash) and dog walking opportunities (such as Wag or Rover) are a great place to start.

For all of these options there are no set work hours — you simply log on or accept a job for the date and time you’re willing to devote.

Other options include renting out a room in your home, freelance writing, babysitting, web work, graphic design, tutoring, etc. Think about your skills and what you enjoy doing and then brainstorm how you may be able to make some extra cash.

A word of warning, though: Make sure you plan ahead for taxes. You’ll work as an independent contractor for most of these side hustles. This means you’ll have to pay your income tax on your own — it won’t be automatically deducted from your paycheck like for a typical full-time job.

3. Tax refund

According to the IRS, the average American receives $2,400 in an income tax refund each year. While this isn’t free money (you’ve essentially lent it to the government over the past year), it is usually an unexpected surprise.

Use this to your advantage and squirrel it away in savings as a nice start to your down payment.

4. Money market account

If you have a significant amount of money in a rainy day fund, a money market account may help you gain a bit of interest on it that can later be contributed toward your down payment. A money market is like a hybrid between a checking and savings account.

While the account may come with checks or a debit card, you’ll likely only be allowed a limited number of transactions each month. On the other hand, you’ll get a much higher interest rate than a checking account, and if you’re lucky, an even higher rate than a savings account.

You’ll enjoy insurance through the FDIC, but your market market account may have a high minimum deposit or balance.

5. Skip vacations

While this sounds like the least fun of all the options, it’s one of the easiest to implement with the least impact to your daily life.

Sure, you may miss this year’s trip to Vegas or the Cayman Islands, but at least you’ll be able to buy a house in a couple years and that’s something you can spend every day enjoying. Don’t worry, it’s not forever — you’ll be on a beach again soon.

If you absolutely can’t imagine life without a vacation or have kids that are begging for one, consider scaling it back. Instead of flying to Disneyland or Jamaica, plan a road trip to the mountains or somewhere you can stay with friends or family. After all, flights and hotel rooms account for most of the expense of a vacation.

About the Author

Clever Real Estate

Clever Real Estate

Guest Writer

Clever is an online referral service that pre-negotiates discounted rates and rebates with top-rated, local real estate agents for home sellers and buyers. If you’re selling, get full listing services and support for a flat fee of $3,000, or just 1% if your home sells for more than $350,000 — saving you up to 66% or more on listing fees.

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