10 ways to save for a down payment

Saving for a down payment — a savings goal likely in the tens of thousands of dollars — can seem almost out of reach. As a first-time homebuyer, the reality is that it’s more attainable than you might think. Give yourself some time and get creative with the following savings strategies.

When saving for a house, your budget might need a little adjusting. Review your current expenses and find areas to lower or pause your spending. That could mean cutting back on takeout, for example, or not buying new clothes for a few months. Remember, this doesn’t need to be a permanent change, just a temporary sacrifice in exchange for your future home sweet home.

One of the best ways to increase your savings is by boosting your cash flow. 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!

If a raise doesn't work out, consider browsing job postings at other companies to potentially earn more in another role at a new employer.

Same idea, different strategy. Think about a side job to earn extra income, whether it’s in the gig economy (rideshare driving, grocery delivery, dog walking, etc.), 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.

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. Ladders let you take advantage of long-term CD rates while still giving you regular access to your money.

Expensive debt, like that from credit cards, can make it more difficult to reach savings goals. Focus on eliminating high-interest debt so you have more to save. Or consider refinancing debt (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.

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 boost your down payment fund without having to tap into your regular budget.

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.

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.

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 if you close within 120 days. You should consult a tax professional before withdrawing retirement funds and consider the downsides of withdrawing from your nest egg, including whether you will be able to meet your retirement goals.