Saving for Your Own Home

Most likely to be the biggest purchase you ever make, and a landmark milestone in so many Americans’ lives, buying your own home is a goal for all kinds of people. However, for most of us, that means taking on a mortgage, and to be approved for that, you will need to put some money down. From property taxes to closing costs, and of course ongoing repairs and maintenance, the costs quickly add up. Our five tips will help you save the money you need.

Tip 1: Create a Dedicated Savings Plan

Don’t just save what’s left over at the end of the month — that approach rarely works. Instead, calculate your monthly savings target based on your goal and timeline, then automate a transfer to a dedicated savings account on each payday. Saving before you spend ensures the money is actually set aside.

Tip 2: Reduce Your Biggest Expenses

Housing, transportation, and food are the three largest budget categories for most people. Look for ways to reduce costs in each: consider taking on a roommate, downsizing your vehicle, cooking more meals at home, and cutting back on dining out. Even modest reductions in these categories can free up hundreds of dollars per month for saving.

Tip 3: Eliminate High-Interest Debt First

High-interest debt (particularly credit card debt) is a major obstacle to saving. If you’re carrying balances at 20% or more interest, prioritize paying these off before aggressively saving for a down payment. The guaranteed return of eliminating high-interest debt is often better than the investment return of most savings accounts.

Tip 4: Look for Additional Income

A second income stream can accelerate your savings dramatically. Consider freelance work in your field of expertise, renting a room or parking space, selling unused items, or picking up occasional gig economy work. Channel every dollar of extra income directly into your down payment fund.

Tip 5: Research Assistance Programs

California offers a variety of programs designed to help first-time homebuyers. CalHFA’s programs provide down payment assistance, closing cost assistance, and below-market interest rate loans to qualifying buyers. Research these programs early — some have income limits and other requirements that may affect your eligibility.