Saving up For Your Down payment in 1 Year
January 24, 2025 | Posted by: Sherry Corbitt
To get approved for a mortgage, you need to put money down on your down payment. Depending on what type of lender you are with, you will need a down payment of 5% or up to 20% of the purchase price. This certainly can be a hefty sum for many, so preparing well before starting the mortgage process is critical. However, there certainly are many ways that you can save up for your down payment in one year.
Make a Separate Savings Account
To make sure that the money you are saving is not touched put it in a separate savings account. You will not confuse it with your other savings and avoid spending it by accident. For example, when you combine your down payment savings with your regular savings, you can quickly lose track of the two. Having this separate bank account will also help you know what your current balance is. This will help you to manage your saving progress and keep everything organized.
Take on Additional Work
To save enough for your down payment in a year can be difficult for many. To ensure that you can reach this goal, you will need to find ways to make additional money. One way to make more money can include working more shifts at your job. This can be a great option if your company needs more full-time employees. Yet if there is not enough work at your current job, you may need to consider a second job. This can be something small on the side, such as dog walking, blog writing, or uber. Having another side job can help you earn another few hundred dollars a month, perfect for saving for your down payment. Before you take on more work, though, ensure that you can handle it.
Modify Spending
This can be one of the simplest ways to save for your down payment. Although simple, it can be difficult for many to get into the habit of modifying their spendings. If you are adjusted to a high spending budget, it will be a big adjustment. Although getting more work will help bring in more money, you will succeed when you budget your total income. Starting with small steps is the key to making modifying spending work. Start by lowering your budget in small amounts every week. Once you have gotten into the habit of reducing your budget gradually, it will not be such an immediate shock. Within this year, focus on essential items that you need instead of things that you want. To assist you with differentiating, create a list and stick to it. When you organize yourself with small reminders and goals, you can successfully stick to lower spending habits.
Downsize Your Vehicle
If you have a car, you certainly know how much of an expense it is. You have to spend money on gas, numerous repairs, and seasonal tires. Depending on what type of car you have, you may be spending thousands on your car every year. If you are trying to save up for your down payment and have a car costing this much, it is very unreasonable. To reach your down payment goal, it would be wise to downsize your vehicle for something smaller. Having something smaller will ultimately cost less in purchasing. It also will run on less gas, which will cut your gas bill down immensely. If you take the time to downgrade your car to something smaller, you certainly will be saving a lot of money, which can be put towards your down payment.
Speak with a Mortgage Professional
If you have taken many steps to save up and still feel worried about reaching your goal of one year, consider speaking with a mortgage professional. You can openly discuss your financial situation with them in a professional setting. They will offer you advice on what you have been doing well and what steps you could incorporate. Their practical advice will be suited for your situation and will push you towards reaching your goal. They want you to attain this so that they will offer the best guidance possible.
If you are saving up your down payment in one year, know that it is possible to do so. It can be a challenge, depending on how much you already have saved up. Yet with determination and taking the proper steps, you can get your down payment for your mortgage!
If you have any questions about getting a down payment in one year, please contact me!
Sherry Corbitt, Mortgage Broker
Sources
-My Money Coach (2020). 8 Ways to Save a Down Payment For a Home or Any Big Purchase. Retrieved from https://www.mymoneycoach.ca/saving-money/saving-up-for-a-home
