By Janet Siroto
May 2, 2022

( / Getty Images)

If you’re saving for a down payment for a home—particularly your first—you probably know this is one tricky real estate moment.

With inflation sending prices spiraling, mortgage interest rates ticking up, and biddings wars on homes more the norm than the exception, it’s clear that homebuyers will need to save every cent in order to compete in this crazy market. This means you’ll need to bring your A-game to saving up for a house.

Yet if amassing a down payment seems all but hopeless, we’re here to help. Here’s how to turbocharge your house fund so it’s ready for your house hunt.

Know your number

Budgeting is easier when you know exactly what your goal is. Do you need $50,000? $60,000? Much more? Figure it out so you can get real about saving.

“I would recommend that prospective homebuyers ‘back into’ the math,” says Jason J. Krueger, a certified financial planner and financial adviser with Ameriprise Financial Services in Madison, WI. “Start with how much house you want to buy and what type of loan—for example, conventional mortgage, FHA, VA,—which dictates the required down payment. The next thing is to determine when you want to buy. This then allows someone to aim for a specific target.”

So let’s say that a year from now, you hope to buy a $300,000 house with a 5% down payment, which amounts to $15,000. Divide $15,000 by 12, and you’ll see that it would take saving $1,250 a month to reach that goal. As you look at your cash flow—how much income is coming in versus how much is going out—you can assess how realistic that amount is, and adjust as needed.

Let tech track your cash

Let’s be real about what’s happened during the COVID-19 pandemic. Did you wind up subscribing to every pay-per-view platform out there? We get it. Did you start ordering takeout (like, a lot) because you were sick of cooking? Understood. But if you’re in savings mode, it’s time to recalibrate and get rid of some recurring and random charges.

Money is a funny thing; it seems to flow like water—often down the drain.

To help you get a grasp on why your dinero is disappearing, consider downloading a cash-tracking app. Mint is one well-reviewed example. It’s a free app that syncs an array of accounts (checking, savings, credit cards, and more) and can categorize your spending into buckets. You can set spending caps for each of them, and as you approach the limit, Mint lets you know. It’s a seamless way to stay on target with savings.

You might also be interested in “zero-based budgeting system” apps like YNAB, or You Need A Budget. These help you plan where every dollar you earn should go. It requires a commitment from you to keep on top of your financial life, but that’s the point. You become more intentional about managing your money and trimming areas where you are spending a bit too freely.

Switch up your savings

Here’s a cool way to not feel too deprived while saving for a house.

“For anyone trying to free up cash in their budget so they can save more aggressively, consider cutting out certain nonessential purchases on a rotating monthly basis,” advises Tanza Loudenback, a certified financial planner and journalist. “For example, you might cut out food delivery for the month of February. Any money you would have spent on that can go into your down payment fund. In March, maybe you cut out online shopping.”

This rotation schedule means there always is an end in sight, which makes saving less painful.

Bundle up for lower payments

You might be able to lower some monthly expenses by paying upfront.

“Some vendors—insurance, subscriptions—will price their services so you get a discount if you pay annually vs. every month,” says Josh Trubow, a certified financial planner and senior financial adviser at Sensible Financial. “Amazon [Prime] is a great example of this, but homeowners and auto insurance policies may also offer similar discounts. If you are planning to pay these expenses anyway, paying them all upfront once a year may allow you to save a bit, if you have the cash available.”

Rethink your living space

You’re saving for what is probably the biggest purchase of your life, and a key path to building wealth. All good! So how about rethinking your current housing situation? If you rented in an apartment complex with all the bells and whistles, maybe less luxe lodging for a year or so would help you save more.

Many aspiring homebuyers have also been known to move home with their parents for a year while saving. According to Pew Research Center, the COVID-19 crisis triggered a majority (52%) of 18- to 29-year-olds to live with their parents—even more than during the Great Depression, the previous peak. It’s definitely one way to divest yourself of a major monthly expenditure.

Get an influx of cash

Flip the script, and instead of thinking about how to spend less, brainstorm how to make more. Many people forget this possibility. Is there a side hustle you could cultivate for a while, walking dogs in your neighborhood, perhaps? One recent survey of millennial homebuyers found that 36% had used earnings from a second job to help fund a down payment.

Another avenue to explore: Could you sell things you no longer want or need to raise cash?

“I know of prospective homebuyers melting down jewelry—gold and/or silver—and using that toward saving for a house,” says Tami Bonnell, co-chair of EXIT Realty Corp. International. “They feel investing in a home will give them a greater return than holding onto the jewelry.”

With moves like these, you might find you can reach your down payment goal that much quicker.