Down Payment Dilemmas: Strategies for Saving and Financing Your Home

Saving up enough cash for a down payment is one of the biggest hurdles for hopeful homeowners. Down payments on a typical home can range between 3-20% of the purchase price. For many buyers, scraping together tens of thousands of dollars may seem impossible. Here are creative tips for building your down payment fund and using other financing options.

Start Saving Early

Saving for a down payment takes diligence, discipline, and time. Starting early and making regular contributions to your housing fund is key, even if it’s just $50-100 per month. Take advantage of time and compound growth. Open a separate high-yield savings account and set up automatic transfers to have funds grow through interest.

Aim to eventually save 20% of your target home price to avoid private mortgage insurance. But don’t delay your home search simply because you lack the full 20% down. Many financing options require less. The key is starting to save as soon as this goal is on your radar so funds can accumulate.

Lower Other Costs

In addition to boosting down payment savings each month, look for areas to trim spending. Small daily savings from preparing meals at home, limiting takeout coffees, or driving less quickly compound. Build a reasonable budget that devotes as much excess towards housing as possible.

An average dinner out costs around $40-$50 for two. Cutting restaurant meals in half could save hundreds monthly. Review expenses to identify lower priority costs you can temporarily redirect into home savings. Every dollar counts when building your down payment fund.

Explore Low Down Payment Loans

Don’t be dismayed if you can’t amass 20% down before purchasing. According to the folk at Mortgage Maestro, a conventional home loan allows down payments as low as 3%. FHA loans only need 3.5% down. VA and USDA loans often require zero down for qualifying borrowers. Discuss options like these with lenders to secure a home sooner than trying to save a full 20% down.

You will pay additional fees for mortgage insurance with less than 20% down. But low down payment programs make owning achievable for the many buyers who lack substantial cash reserves. Explore the possibilities so saving more doesn’t delay your dreams.

Research Down Payment Assistance

Thousands of down payment assistance programs exist, offered by governments, non-profits, employers, and more. These programs provide grants, forgivable loans, or deferred loans to cover portions of your down payment and closing costs. Eligibility varies based on location, income level, first-time buyer status, occupation, and other factors.

Online tools can make locating programs easy by simply entering your city and state. You’d be surprised at how many options are available that you may qualify for based on your background and demographics. Take advantage of these free resources to reduce the cash needed upfront.

Use Creative Sources

In addition to grants and assistance, also consider creative sources when cobbling together your down payment. Many families gift funds to children and grandchildren to aid with this major purchase. Your future home loan is also allowed to be gifted.

If you have investments, withdrawing funds to use as a down payment could make sense, too. Just be sure to consider long-term trade-offs, like missing out on future investment gains. Every situation is unique but explore all possibilities when dreaming of homeownership.


With the right preparation and financing approach, a down payment doesn’t have to hinder your home buying plans. Determine an optimal timeline, trim expenses to bolster savings, and thoroughly research low down payment mortgages and assistance opportunities in your area. You’ll be surprised to find out how many options exist to make homeownership achievable sooner rather than later.