Saving for a Mortgage Down Payment

Embarking on the journey to homeownership involves conquering the challenge of saving for a mortgage down payment. Traditionally, saving 20% of a home's value was the recommended savings goal. But in today's world, some mortgages may only require a 3% down payment. Regardless of what's required, the more money you're able to put down initially will save you from a larger monthly payment and will ultimately save you money through the life of the loan. At First American 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 Illinois, Florida, Wisconsin and beyond.

Define a Clear Savings Goal

Begin your home buying 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 mortgage calculator can help in setting your expectations. 

When it comes to mortgages, we understand that each of our customers has different financial circumstances. That's why we offer different mortgage options, including Fixed Rate, Adjustable Rate, Jumbo, FHA, VA mortgages and more to make sure you have the one that's right for you.

Create a Strategic Budget

Planning a strategic 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 home budget analysis calculator can help you see where your money is going. 

Allocate a dedicated portion of your income to your down payment fund. This ensures consistent contributions while helping you prioritize your homeownership goal. Consider making sacrifices in discretionary spending, such as dining out less frequently or finding more cost-effective alternatives for entertainment. 

Utilize a Separate Savings Account for Your Savings Goals

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 Money Market Accounts and Certificates of Deposit are available to you at First American 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.

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 flexible 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, 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 tax professional to navigate any tax-related considerations and ensure that you maximize benefits of your increased earnings. 

Maximize Financial Windfalls