Eight simple ways to save for a home purchase.

You’ve decided it’s time to buy a home. But finding enough money for a down payment can be a challenge, especially when you’re trying to keep up with ongoing commitments. The good news is that with the right strategies, you can overcome this financial hurdle and unlock the door to your new home sooner than you might think. Use these tips to help save for a home purchase while managing everyday expenses.

1. Confirm how much you actually need

Down payment assistance programs can dramatically reduce the amount you need to save, yet many buyers don't know they exist. Most states and major cities offer free grants or low-interest loans for first-time buyers. Some programs cater to specific professions like teachers, healthcare workers, or first responders, while others focus on specific neighborhoods to encourage development.

Check with your state's housing authority and local housing organizations to identify programs in your area.

2. Set a savings goal

Calculate your ideal down payment percentage and add estimated closing costs to determine the precise dollar amount you'll need to save. A realistic savings target considers the minimum down payment requirements, which typically range from 3% to 20% opens in a new window of the purchase price, as well as closing costs that can add another 2% to 5% opens in a new window to the loan amount.

To pinpoint your savings target, research home prices in your desired area. For example, if you're eyeing a $300,000 home with plans for a 10% down payment, you might set a goal of $40,000 to cover both the $30,000 down payment and $10,000 in closing costs.

3. Open a high-yield savings account

Make your savings work harder for you by depositing money into a high-yield savings account. While investing in stocks or other volatile assets have the potential for high returns, they also come with their own set of risks. But a high-yield savings account keeps your money safe through FDIC insurance while still earning meaningful returns. This matters since timing is crucial in real estate — you need the exact amount available when you find the right house, without worrying about whether the market is up or down.

4. Reduce unnecessary expenses

Trimming expenses doesn't mean eliminating all joy from your life, but it does mean making strategic choices about which splurges add value to your daily experience. A careful review of your monthly subscriptions, memberships, and routine indulgences could reveal hundreds of dollars in potential savings that you can redirect toward your down payment fund.

5. Explore extra income opportunities

While eliminating unnecessary expenses is important, earning extra money can build your down payment fund faster. You might be able to pick up flexible work like food delivery, pet sitting, or tutoring that lets you control your schedule. Another option is to freelance in your professional field during the evenings, which often pays better than random gigs since you're using your existing expertise.

You don't have to maintain the extra work forever. Even six months of additional income can significantly increase your savings balance.

6. Automate your savings

Setting up recurring transfers from your checking to another dedicated account creates a “set it and forget it” system that treats your savings like any other non-negotiable monthly bill. An account set aside for a single purpose makes it easier to track your progress and achieve your savings goal. Plus, an automated approach helps overcome common obstacles like procrastination, impulse spending, or simply forgetting to transfer money manually each month.

7. Sell used items

Clear space in your current home while earning extra cash for your down payment fund. You might have hundreds or thousands of dollars worth of sellable items in your closet, garage, or attic. Online marketplaces like Facebook Marketplace, eBay, and specialized resale apps make it easier than ever to quickly convert unwanted items into cash.

8. Deposit Financial Windfalls

Treating windfalls as “found money” for immediate spending is a common mistake that can significantly slow down your path to homeownership. Instead, adopting a policy of automatically directing unexpected income to your home savings fund can boost your down payment balance with little effort. Common windfall opportunities include:

• Tax refunds
• Overtime pay
• Inheritances
• Annual workplace bonuses

For example, depositing a $2,500 tax refund, a $1,000 year-end bonus, and $500 in various gifts directly into your home savings fund adds $4,000 to your down payment in just one year without affecting your regular budget or lifestyle.

As you build your down payment fund, start exploring mortgage loan options. Many choices are available, including some that allow monetary gifts from family members and others with minimal down payment requirements. For homebuying questions or assistance, you can contact our Mortgage Concierge Team at (844) 340–2574 or allthingsmortgage@commercebank.com. We’re here to help.