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IN THE KNOW

SAVING FOR A DOWNPAYMENT

MARCH 14, 2024 | HOME LENDING


Saving for a downpayment may be more achievable than you think. If you are planning to buy a home, it is important to understand the mortgage options available to you and the home buying process. With this knowledge, a dedicated savings plan, and the right financial tools, you can confidently save for this first step in your journey towards homeownership.

DETERMINE YOUR DOWNPAYMENT GOAL

Most mortgages do not require a 20% down payment. Research housing prices in the area you are looking to buy and explore different loan options to determine a realistic down payment goal.

EXPLORE YOUR OPTIONS

Depending on the type of loan you qualify for, your required downpayment may be significantly reduced. For example, most FHA loans only require 3.5% down while VA loans have no required down payment.

You may also qualify for a downpayment assistance program or grant, especially if you are a first-time homebuyer. These programs vary by area but may be able to help supplement your downpayment.

AUTOMATE SAVING

Set it and forget it. Set up automatic transfers to your savings account. This is an important tool for reaching any savings goal. This will help your savings account grow steadily over time and save you from having to remember to make transfers.

When you can, you should also use your savings account to put away extra income such as bonuses and tax refunds instead of spending them.

FIND THE RIGHT SAVINGS ACCOUNT

The best way to save for your down payment depends on your goals and circumstances. There are a number of options for growing your savings beyond what you deposit including high-yield savings accounts, money market accounts, certificates of deposit, and investment.

Finding the best solution for your unique circumstances will depend on your timeline for purchasing a home, risk appetite, and more. An Adams Bank & Trust relationship banker can help you identify the best savings approach for you.

Savings for a downpayment is an achievable goal. Adams Bank & Trust can help you explore options and begin working towards your savings goal today.

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