Down Payment Calculator

Using a home down payment calculator can help you determine how much you can afford, or how much more you need to save.

Getting Started

Enter the approximate price range you expect to pay for a house, the percent payment you want to put down, and a few other criteria.

The calculator will then tell you the down payment needed to purchase the home. It also provides you with customized charts and grids to help you reach your saving goal.

That was the easy part. The next part, i.e., saving for the down payment, is a bit harder but well worth the effort.

Conventional Mortgage

For a conventional mortgage, you'll have to use 20% of the home's value as the down payment.

But, what few potential homeowners realize is that there are many programs available that don't require a 20% down payment. In fact, several programs allow you to put down as little as 3.5%.

What you do need to know about putting less than 20% down is that in most cases, you'll need to pay private mortgage insurance (PMI) to close the gap on the loan's risk.

Low Down Payment Programs

Most banks and credit unions offer mortgage products using a form of PMI. Low down payment programs include:

• Fannie Mae's HomeReady (conventional)
• Freddie Mac's Home Possible (conventional)
• FHA loan (government)
• VA loan (government)
• USDA loan (government)
• Down payment assistance programs through your state's housing finance agency (conventional or government)

Knowing that you can get a loan through one of these programs can help you set more realistic expectations for your savings goals and timeline.

Ask your loan officer or mortgage broker for more guidance on the best loan for you.

Everyone's savings journey is different.

Some are long, and some are short. You'll have to opt for a timeline that makes the most sense for your budget and savings potential.

If you're a young professional still living with your parents, you might be able to buy your own place sooner than you think. With no or reduced rent, you can save a significant amount of money for your down payment.

Others might be living in a rental house or apartment in which case you will be tied more to lease agreements. If you have another year on your lease, you could consider buying a house at the end of your lease or extending it if you need more time for a down payment.

Saving for a down payment is not as challenging as it seems. Yes, it requires more discipline with your budget, but your end result will be buying a house!

Automatic Transfers

One of the easiest methods to get money into a savings account is to set up a direct deposit from your employer to your savings account.

You don't need to put your entire check into savings, just a percentage of it. Most employers allow you to do this through your company's HR platform.

If you're a freelancer or work a job where a direct deposit isn't an option, try setting a calendar reminder for yourself each payday, or have your bank do it for you.

When you deposit your check, transfer a set percentage of that check to your savings account. Even if it's only $20 per paycheck, those savings will start to add up.

Investing

For accumulating savings outside of a traditional savings account, try an app like Acorn which rounds up your debit transactions to the nearest dollar amount and puts those funds into an investment account.

It's a simple tool that can help you set aside money to use for your down payment. Other options include investing a lump-sum of money into interest-earning CDs or money market funds.

Budgeting

For others, the easiest way to save money for a house can be to closely examine your spending habits. Too often, potential homebuyers are spending money in unnecessary places.

For example, if you're stopping at Starbucks every day for your iced coffee, invest in a $20 cold brew carafe and make your iced coffee yourself.

You'll save tons of money each month from this one change in habit.

Using an app like Mint, or tools like our budget planner can help you categorize your spending and identify areas where you spend too much.

Each month, try reducing the costs in one category and put those savings towards your down payment fund.

If you have your eye on a particular home, but you haven't saved enough, you may have a few options.

Borrow from Your 401K

If you're looking to buy a house on a shorter timeline, one thing you can do to boost your savings quickly is to borrow from your 401(k).

You'd only want to take this option if your 401(k) is well-funded and you can repay your account (with interest to yourself) in five years.

You should also know that you can only borrow up to half the amount in your 401(k).

Nonetheless, it can be a good option for those who need a lump sum to reach their down payment savings goals in a pinch.

Side Hustle to Earn Extra Cash

If you don't already have a side hustle, picking one up can be a very easy way to help you save for a house.

The key to running a side hustle is to tap into the strengths and skills you already have. These can be physical skills or knowledge-based strengths.

Here are some popular side hustles that might be worth trying:

• Freelance writing or content strategist
• Sell crafts on Etsy or at farmers markets
• Freelance web development
• Consulting on a particular industry you have experience in
• Babysitting
• Dog walking
• Random tasks on apps like TaskRabbit
• Starting a niche affiliate blog

There is truly no limit to what you can do as a side hustle.

Just remember: if you're starting a side hustle for the purpose of saving money, you should funnel those earnings directly into your down payment fund.