Saving For a Mortgage Down Payment

Embarking on the journey to homeownership involves conquering the challenge of saving for a mortgage down payment. Twenty percent of a home’s value was traditionally the recommended goal to save. But in today's world, some mortgages may only require a three percent down payment. While requirements vary, increasing your down payment amount can potentially lower your monthly payment and reduce the total interest paid over the life of the loan. At Securityplus Federal Credit Union we are here to support you with key strategies and resources, so you can maximize your savings when preparing to purchase your dream home in Maryland.

Define a Clear Down Payment Savings Goal

Begin your journey by establishing a specific savings goal for your mortgage down payment. Calculate the required amount based on your budget and the type of mortgage you're aiming for. You’ll want to consider factors such as the required down payment percentage, the total home purchase price, and any additional costs like closing fees. Tools like our Home Affordability Calculator may help you better understand how much home you can afford based on your financial situation.

When it comes to mortgages, we understand that each of our members have different financial circumstances. That’s why Securityplus FCU offers different mortgage options¹, including Conventional Fixed Rate, ARMS, First Time Homebuyer, VA , FHA Mortgages and more to make sure you have the one that’s right for you.

Create a Strategic Homebuying Budget

Planning a comprehensive budget is the cornerstone of successful saving. Begin by tracking your income and expenses to identify areas where you can cut back or eliminate unnecessary spending. Evaluate your monthly bills, subscriptions, and leisurely spending to find opportunities for savings. Our Budget Calculator can help you itemize your spending.

Allocate a dedicated portion of your income to your down payment fund. This ensures consistent contributions, while forcing you to prioritize your homeownership goal. Consider making sacrifices in discretionary spending, such as dining out less frequently or finding more cost-effective alternatives for entertainment. It can be difficult to budge on habits you may be used to, so keeping your savings goal in mind will be important here.

Utilize a Separate Savings Account

Designate a dedicated savings account exclusively for your down payment funds. Not only does this prevent accidental spending but also reinforces your commitment to your financial goal. Securityplus FCU offers Savings Accounts, Share Certificates, and Money Market Accounts where you can automate regular transfers from your primary account to your dedicated savings account. This not only streamlines the saving process but also ensures that you prioritize your homeownership goal, without thinking about manually making a transfer. Over time, these automatic contributions can become a seamless part of your savings routine.

Look Into Additional Sources of Income

Considering a side hustle is becoming quite common in today’s gig economy. Driving for a rideshare company like Uber or Lyft² is a nice, simple option for earning money on your own time. Other ideas you can consider are picking up freelance work, pet sitting, monetizing a hobby, or even renting out your car. It may take time to find the option that is right for you, just remember that the results will be worth it.

With that said, it’s important to note the potential tax implications that may arise from additional income. Consult with a local Maryland tax professional to navigate any tax-related considerations and ensure that you maximize the benefits of your increased earnings.

Maximize Financial Windfalls

Non-recurring payments, such as tax refunds, work bonuses, or monetary gifts, are great contributors to your down payment fund. It can always be tempting to use these for other purposes, especially when taking into consideration your regular savings. But, this can really help with your goal timeline and prioritizing this will pay off in the long run.

Saving for a mortgage down payment demands strategic planning, financial discipline, and a clear commitment to your objectives. By following these strategies, you can make progress toward one of life's most rewarding milestones. Homeownership is within reach, and Securityplus FCU is here to support you at every step. Please feel free to contact us if you have any questions or need financial assistance as you are working towards your dream home.