Saving For a Mortgage Down Payment

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. Regardless of what’s required, the more money you’re able to put down initially will save you in the end from a larger monthly payment and will ultimately save you money through the life of the loan. At Patriot Bank, 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 Southern CT or NY.

Define a Clear 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. Our Loan & Credit Line Payment Calculator can help in setting your expectations.

When it comes to mortgages, we understand that each of our members has different financial circumstances. That’s why Patriot Bank offers different mortgage options, including Fixed Rate Mortgages, Adjustable Rate Mortgage Loans, a First Time Homebuyer Program, and VA Loans to make sure you have the one that’s right for you.

Create a Strategic 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.

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 in mind your savings goal 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. Keep in mind that transferring this money into a basic savings account won’t show ideal growth compared to other options. Options such as a Star Savings Account are available to you at Patriot Bank for a better rate of return.

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 even thinking about manually making a transfer. As time passes, you won’t even notice money coming out of your checking account.

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 Lyft 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 Southern CT or NY 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 comprehensive strategies, homeownership becomes a rewarding milestone, which will set the stage for a secure and fulfilling future. Remember, it isn’t out of reach and Patriot Bank is always here to support you.

Please feel free to contact us if you have any questions or need financial assistance as you are working towards your dream home.