Gears icon with text, Save for down payment.

You’ve saved up for jewelry, a new PlayStation, maybe even a car. But saving for a down payment on a house is a whole new ball game. A savings goal likely in the tens of thousands of dollars can seem almost out of reach as a first-time homebuyer, but in reality, it’s more attainable than you might think. Give yourself some time and get creative with the following savings strategies, and you can hit your down payment target.

1. Take advantage of automation.

First and foremost, automating your weekly, biweekly, or monthly savings is a critical strategy to reaching your goals. By putting your savings contributions on autopilot, whether through a direct deposit or using a tool like recurring transfers to your Ally Bank Online Savings Account, you can ensure consistent growth to your down payment fund without having to think about it.

2. Find areas to freeze spending.

When saving for a house, your budget might need a little adjusting. Review your current expenses and find areas you can lower or pause your spending altogether. That could mean cutting back on takeout, for example, or not buying new clothes for a few months. And remember: This isn’t a permanent change, just a temporary sacrifice in exchange for your future home sweet home.

3. Seek a raise.

One of the best ways you can increase your savings is by boosting your cashflow. If the timing is appropriate, and you feel confident in your performance on the job, consider asking your employer about opportunities for advancement or negotiating a raise. Then, if you receive a salary boost, direct your new income straight to savings — you won’t even miss it!

4. Get a side hustle.

Same idea, different strategy. Think about a side job to earn extra income, whether it’s in the gig economy (ride-share driving, grocery delivery, dog walking, etc.), starting a small business (like selling crafts on Etsy), or an online service (like online tutoring or transcribing). You might even think about working part-time at a shop or restaurant. These can be a great way to earn money in your off hours.

5. Use a CD ladder.

When you save, you want to make every dollar count. Certificate of Deposit, or CD, laddering is a smart way to maximize compound interest for your deposits. They let you take advantage of long-term CD rates while still giving you regular access to your money.

Learn more: Here’s how to build a CD ladder.

6. Knock out high-interest debt.

Expensive debt, like that from credit cards, can make it more difficult to reach savings goals. Focus on eliminating high-interest debt, so you can have more to save. Or consider refinancing debt (from credit cards, student loans, etc.) to receive lower interest rates and free up cash from your monthly expenses, which you can then direct toward your down payment savings.

7. Use windfall money.

Stimulus checks, tax returns, holiday bonuses, a check from grandma and grandpa: Send ’em straight to savings. If you’re lucky to receive windfall money, it’s a great way to give your down payment fund a major boost without having to tap into your regular budget.

8. Sell items you don’t use.

Whether you have kitchen gadgets, old toys, furniture, clothes, etc., it’s easy to sell items in good condition to make extra cash. Declutter your home, then head to a thrift shop, host a garage sale, or post your stuff on sites like eBay, Poshmark, or Facebook Marketplace.

9. Explore special programs for homebuyers.

Many local and national programs exist to provide qualified first-time homebuyers with down payment assistance or affordable rates. For example, Fannie Mae’s HomeReady Mortgage program allows buyers to make down payments as low as 3%, and the Federal Housing Association (FHA) offers loans that require only 3.5% down.

10. Pause or tap into retirement savings.

If you’re contributing a significant portion of your income to retirement savings, you might temporarily reduce that amount and redirect it to home savings for a few months. First-time homebuyers can also tap into an IRA without penalty up to $10,000 for a down payment. However, you should consult a tax professional before withdrawing retirement funds.

How much should you save for a down payment?

You’ve probably heard the common homebuying myth that you need at least 20% of your home’s price for a down payment. But you actually have several options that can reduce your down payment to as low as 3%. Don’t be afraid to explore FHA loans, Freddie Mac and Fannie Mae loans, and VA or USDA loans, if you qualify.

Keep in mind, if your down payment is below 20%, you will likely have to pay private mortgage insurance, or PMI, along with your monthly mortgage payment. This protects your lender in case you aren’t able to pay your mortgage. Once you have 20% to 22% equity in your home, you can typically cancel the coverage or it drops off.

Other Costs to Consider When Saving for a Down Payment

In addition to your down payment, you’ll have to pay other costs at the close of the sale. You should be prepared to pay 2% to 5% of your home’s purchase price in closing costs, which covers fees paid to your lender, like discount points, origination fee, and sometimes application fees or a processing fee. You’ll also be charged fees by third parties to cover the costs of the appraisal, home inspection, title search, insurance, attorney, credit bureau, flood certification, tax certification, and recording/state fees.

Read more: The down payment is just one piece of the puzzle. Start planning for the total cost of home ownership.

Where are the best places to keep your funds for a down payment?

If you want your money to earn interest while you save, a high-yield savings account could be a smart option. With competitive rates and organizational buckets to keep your down payment funds separate from other savings, Ally Bank’s Online Savings Account helps you maximize your money. Plus, FDIC insurance keeps your savings secure, so you can have peace of mind while get closer to the home of your dreams.

Turn your home goals into reality by saving with an account that works hard for you.

View our Online Savings Account.