Saving for a Down Payment for your Des Moines Dream Home

If you're preparing to purchase your first house in Des Moines, you're probably concentrating on saving up money for everything that purchase entails. Your down payment is one expense that is probably top of mind. But don't make the process more difficult than it needs to be by believing a widespread myth about how much money you need to save.

How much should I put aside before purchasing a home?

The simple answer to the question "How much is a down payment on a house?" is: It depends. A down payment on a home is typically 20%, (or so many consumers think) of the purchase price of your ideal property, plus extra money to pay for expenses along the way. This may involve closing costs, home inspection fees, and ultimately your final relocation expenses like hiring a moving company, buying new furniture, and more.

Understand That a 20% Down Payment Isn't Always Standard

As said by Freddie Mac:

“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more to buy a home. This myth remains one of the largest perceived barriers to achieving homeownership.”

It's normally not necessary to put 20% down unless your loan type or lender specifically states otherwise. You might be closer than you think to realizing your dream of owning a home. According to the National Association of Realtors (NAR), since 2005, the median down payment hasn't exceeded 20%. In actuality, 14% is the current median down payment. And just 6% applies to first-time homebuyers. With different programs, you can have a downpayment as low as 3%, or even less if using certain mortgage types.

Speaking with a local real estate agent and loan officer is also a smart option if you're a first-time home buyer budgeting for a house. These experts can assist you decide how much you can afford to spend as well as how much you would like to spend. Check out a saving for a house calculator in advance to be ready for the meeting!

Discover the Options That Can Lead You to Your Goal

If you're still having trouble saving for a down payment, know that assistance is available. You may be able to find choices that will bring you closer to your down payment target if you work with a reputable lender and real estate expert.

Additionally, there are financing programs like FHA loans that only require 3.5% down payments, as well as USDA loans and VA loans that don't require any down payments at all for qualified borrowers.

How to Save for a Down Payment on a House:

Having a large sum of money saved up is very beneficial whether you're wanting to save for a house quickly or are just beginning your long-term home-buying adventure. Here are a few ideas to help you accumulate that extra financial cushion:

1. Make a budget to minimize irrational spending

Don't be alarmed if you've never made a budget before. It really is as easy as it seems, and it doesn't have to be difficult. Write down all of your spending in a journal or planner. Include everything, including money for groceries, "going out," and gas for your car. Then you may budget any extra money you earn towards savings and consider where you might be able to reduce any wasteful spending.

2. Focus on paying off debt first

It may seem difficult to find out how to pay your expenses, pay off debt, and save for a house all at once. That’s why it may be wiser for you in the long term to focus on paying off any debt you’ve incurred before you begin saving for a housing down payment. Plus, it will help you in the long run!

The amount of money you’re paying to school loans and credit cards adds up, and after it’s all paid off, you’ll be able to allocate that towards your new home.

3. Think about getting a roommate.

If you can accept a roommate in your current living circumstances, it can significantly reduce your living expenses. The money you would have spent on rent can then be put toward your savings. Choose a roommate with care and diligence.

4. Reduce clutter and sell extra items.

It's a good idea to declutter at any time, but it's even better if you can make some additional money by selling your unwanted goods! To sell unique things and attract a larger audience, use platforms like Facebook Marketplace, Craigslist, OfferUp, Poshmark (for clothing), and Ebay. You can use any additional money you earn from selling old clothes, books, games, or other goods to start saving for a down payment on a home.

5. Launch a side hustle

You might already be working a second job in a gig economy. If not, starting a side business is a terrific way to earn extra money that may be used to put a down payment on a new home. You can work retail, wait tables or serve drinks, do dropshipping, or freelance in your area of expertise for as little as 5 hours per week.

6. Save any extra money.

This may sound obvious, but if you get any money from an unexpected source that you weren't expecting, you should put it aside in separate savings accounts just for your house and any moving-related expenses. A few terrific options to make extra money include mail-in rebates, surveys, testing websites and applications, affiliate marketing, and social media (YouTube, TikTok, or Instagram) advertising revenue.

Bottom Line

Keep in mind that a 20% down payment isn't always necessary. Contact a dependable real estate agent or you can contact us directly  to start the conversation and look into your down payment alternatives if you want to buy a house this year.

Although saving for a down payment on a home is difficult, it is attainable with the right planning, strategy, willpower, and dedication. Regardless of the state of the economy, there are always ways to reduce expenditure, even if you initially don't think these options fit your lifestyle.

It all boils down to actually considering what's essential to you in the end. If saving for a down payment and buying a home are top priorities for you, you'll need to make some compromises along the road. When you can proudly lay down that cash you've saved for the down payment on your brand-new property, it will all have been worth it. Have questions about your options? Feel free to reach out and let us help you. We would love to chat with you about all the options available and help you understand what it will take to make your dream of homeownership in the Central Iowa area come true!