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How can I save for a down payment?

January 21, 2021
/ by 
Nicolette Chao
How can I save for a down payment?

Ribbon's top 5 tips on how to save for a down payment, from choosing your downpayment to Down Payment Assistance Programs

We’ll recommend a few tips to help.

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Saving for a down payment can be tough (you can read everything you need to know about down payments here). We’ve compiled a list of tips that are bound to make saving for a down payment easier:

Tip 1: Decide How Much to Put Down

Before you begin saving for a down payment, you need to know how much you want to put down. So, you need to know your max purchase budget — like $200,000. Then you need to decide what percentage of that you want to put down — like 10%. So, you’d need to save $20,000 to purchase a house.

Tip 2: Choose a Time Frame

After deciding how much you want to save, you then need to figure out how long you want to wait to buy a house. Between 2–4 years is a reasonable time frame to allow you to save up — without delaying other savings goals (like retirement or college funds).

Tip 3: Figure Out How Much to Save Monthly

Once you know how much you want to save and how long you want to be saving, you can calculate a monthly savings goal. To do that, you need to divide your down payment goal by the number of months you plan to be saving. For a 10% down payment in 2 years, you would divide $20,000/24 (months). This works out to be around $833 a month.

Tip 4: Cut Expenses and Increase Income

If this seems like a lot of money to save each month — don’t panic! By cutting unnecessary expenses and increasing your income, you can reach that monthly saving goal.

Decreasing Expenses

Unnecessary expenses are things like that Starbucks run every morning (though we do love our lattes), eating lunch out every weekday, and expensive gym memberships. You can make coffee and lunch at home, which can still be tasty, and work out at home — without sacrificing your quality of life.

Increasing Income

While cutting back expenses can save you hundreds a month, it might not be enough to reach your savings goal. In this case, looking for extra income sources can help. Having a side hustle –like walking dogs, driving people around with a ride sharing service, or tutoring– can help you bring in hundreds a month. And, it can be fun to do if you choose a side job you like!

Step 5: Look at Down Payment Assistance Programs

Along with trimming your expenses and bringing in more income, down payment assistance programs can help you come up with a down payment. They cover all or part of your down payment.

Down payment assistance programs are usually for first time home buyers. They’re designed to make buying a house more affordable for low or middle income buyers. So, if you have a high income, you might not qualify for these programs.

Each state has different down payment assistance programs, so you can check out what programs your state has here. Down payment programs generally fall into 4 categories:

Loan Paid with Mortgage

One type of down payment assistance is a loan that has to be paid back along with your mortgage. Usually lower interest, this type of assistance is an added monthly payment you repay over a shorter period (like 10 years).

Loan Due at Sale

Another down payment assistance type is a loan that you only have to repay when you sell your home. So, you don’t have to worry about monthly payments. You just have to allot some of the proceeds from selling your home to repaying this loan.

Forgivable Loan

Other down payment assistance programs include a loan that doesn’t have to be paid back if you stay in your home for a while — like 5, 10, or 15 years. If you sell your home before this period, you’ll have to pay back the entire loan once you sell your home.


Down payment assistance grants don’t have to be paid back — regardless of how long you’re in your home or when you sell it. So, grants can help you come up with the money for a down payment — without an added expense once you buy a home.

Down payment assistance programs can help you have a down payment — even if you can’t cut expenses or increase your income enough to meet your saving goal.

Wrapping It Up

Saving up a down payment can make buying a home seem impossible. You already have to pay student loans, rent, and the many other expenses of being an adult. You’re probably thinking, how can I fit saving tens of thousands into your already cramped budget?

The good news is that you don’t have to save up tens of thousands to buy a home. You can put as little as 3% down on many loans — and even 0% down on specialized loans. This means you could put down less than $10,000 and still be able to buy your dream home.

By creating a monthly savings goal, cutting expenses, increasing your income, and looking at down payment assistance programs, you can save up for your dream home in no time!


Written by: 
Nicolette Chao