How to Save for a Downpayment on a Home in San Diego.

8 Tips to Save for Down Payment – (Yes you can do it!)

In today’s mortgage loan world, there are many choices to help buy a home. No longer do you need 20% down in order to qualify for a mortgage loan. Loans start with as little as 3% down. Here’s how you can start your saving plan to make your home buying dreams come true!

Start by researching the down payment requirements for the loan you want so you know exactly how much you’ll need. For a median priced home in San Diego, at $450,000, that is about $13,500.

Of course the more money you are able to put towards your down payment, the lower your monthly costs will be.


1. Transfer a fixed amount into a special savings account every month.

This is the most popular—and convenient—way to save. Set up an automatic direct deposit into a savings account. Commit to never use these savings for any purpose other than your down payment.

2. Skip vacations for a year.

If you save the money you would have spent vacationing, you can make significant contributions toward a down payment.

3. Lower your expenses.

Review your expenses and look for what you can reduce or eliminate. Put the money you would have spent on these items into your down payment savings account.

4. Reduce your high interest rate debt.

High interest rates on credit cards can seriously limit your ability to save. Pay off your high interest rate credit cards. Start with your highest interest rate card; when you’ve paid the entire balance, close the card, and proceed to pay off the next. At a minimum, transfer your credit card balances to the card with the lowest interest rate.

5. Borrow from a relative.

Many parents or relatives help out when it’s time to buy a first home. Gifts can come from your family, spouse or a domestic partner. Just be sure to include the amount of the gift on your loan application.

6. Borrow from your retirement plan.

Look for penalty-free withdrawals for home buyers in your plan. Many company-sponsored 401(k) or profit-sharing plans allow employees to borrow against their savings to purchase a home. Your Human Resources or Payroll department can help.

7. Sell some of your investments

Think of this simply as a way to move some of your current investments into another investment vehicle – your home! As you make payments on your mortgage, you accrue equity in your home. As the value of the home increases, so does the return on your investment.

8. Get a second job.

Even temporarily, earnings from a second job can help you make substantial contributions to your down payment savings.

If a friend, relative or employer has offered to provide a down payment gift, initiate a conversation early on to learn how much they plan to contribute and if there’s any shortfall you’ll need to cover.

Key takeaways:

Consider options backed by the federal government if you don’t have much saved for a down payment. FHA loans, insured by the Federal Housing Administration, require just 3.5 percent down. VA loans and USDA loans require no down payment.Conventional loans backed by Fannie Mae and Freddie Mac require just 3 percent down.Look into a local or state first-time homebuyer assistance program to help with closing costs or your down payment.

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