Six tips for saving for a down payment

6 Tips For Saving for a Down Payment

Before you can make the transition from renting your home to owning your home, you will need to have a substantial down payment, typically 5 to 20 percent of the home’s value. The American Bankers Association suggests the following tips to help save for it:

Develop a budget & timeline – Start by determining how much you’ll need for a down payment. Create a budget and calculate how much you can realistically save each month – that will help you gauge when you’ll be ready to transition from renter to homeowner.

Establish a separate savings account– Set up a separate savings account exclusively for your down payment and make your monthly contributions automatic. By keeping this money separate, you’ll be less likely to tap into it when you’re tight on cash.

Shop around to reduce major monthly expenses – It’s a good idea to check rates for your car insurance, renter’s insurance, health insurance, cable, Internet or cell phone plan. There may be deals or promotions available that allow you to save hundreds of dollars by adjusting your contracts.

Monitor your spending – With online banking, keeping an eye on your spending is easier than ever. Track where most of your discretionary income is going. Identify areas where you could cut back (e.g. nice meals out, vacations, etc.) and instead put that money into savings.

Look into state and local home-buying programs – Many states, parishes and counties and local governments operate programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants.

Celebrate savings milestones – Saving enough for a down payment can be daunting. To avoid getting discouraged, break it up into smaller goals and reward yourself when you reach each one. If you need to save $30,000 total, consider treating yourself to a nice meal every $5,000 saved. This will help you stay motivated throughout the process.

Shopping Online? There’s a difference between credit and debit.

Shopping Online? There’s a difference between credit and debit.


Debit cards and credit cards may look and swipe the same, but they work completely differently. Each has its advantages and disadvantages, which is important to consider when you’re using one to shop online.


Because you can’t ever spend more money than you have, the advantage of using a debit card is that you don’t incur debt. Therefore, there’s never any interest charges or late fees to worry about. In fact, you never have to make any payments at all, but you will have to regularly add funds to your checking account if you’re using this card for your daily purchases.


Debit cards have a distinct disadvantage when it comes to online shopping security, since debit card fraud protections aren’t as strict as those for credit card fraud. If your debit card is lost or stolen, or if your payment information is compromised online in any way, a fraudulent payment will immediately be deducted from your account.


A credit card represents a potential loan from the card issuer to the customer. Every time you make a charge to your credit card, either online or in person, you’re taking out a loan. And unless you pay your statement balance in full, you’ll have to pay interest charges on the amount that you borrow.


Credit cards are protected by strong federal laws, which prohibit card issuers from charging you for fraudulent transactions. These laws give you, the cardholder, the right to dispute the charges for products and services you didn’t receive, and even charges for things you bought that were not as described.


So, protect yourself by using your credit card for online purchases, and then paying off the card balance with your debit card or checking account.