3 Easy Ways To Save For Your First House Down Payment

First time saving money for a house down payment? It's a difficult task to save the 20% some mortgage companies want you to have. Luckily I know 3 specific home down payment tips that can help you save money faster than you ever thought possible. (#1 was the most effective method to start saving for a down payment for me!)The typical American Dream includes buying a home with a white picket fence, not renting for life.

Now, I’m not saying your dreams should line up with the American Dream.

However, if buying a home, with or without the picket fence, is part of your American Dream then you’ll need to be able to save up for a down payment for your first home.

Saving For Your First House Down Payment Won’t Be Easy

Saving up tens of thousands of dollars is no easy task, but if you want to buy a home that’s exactly what you’ll need to do.

I personally recommend putting at least 20% down on any home you buy. That means a $100,000 house would require at least $20,000 down and a $200,000 house would require a $40,000 down payment.

Both amounts are daunting to a new saver, but it is very possible to accumulate enough money for your first home’s down payment.

I know from experience as I have saved up two 20% down payments, the first for our townhouse we bought on a whim and the second for our long-term home.

Save Extra “Housing” Money

I actually started saving for my first house as soon as I got my first paycheck from my first post-college job. I remembered reading somewhere that I should budget 33% of my income for housing and housing related costs (insurance, taxes, etc). However, I was only spending 20% of my income on rent and renter’s insurance.

So what did I do? Instead of spending the money somewhere else, I took that extra 13% I wasn’t spending on my rent and put it into a targeted savings account called First Down Payment. This method can eventually reward you with a proper sized down payment for your first home but it might take a while.

If you’re planning on buying a house in the next few years, your current housing cost must be much lower than the recommended 33% or else it would take decades rather than just years to do accumulate a 20% down payment. 

Luckily, there are other methods you can and should supplement this method with.

Put All Extra And Unexpected Income Toward Your Down Payment

Since you’re likely trying to save up for a down payment as fast as you can you might want to take some extraordinary measures you wouldn’t normally consider. You know how sometimes you run into some extra money throughout the year? Bonus checks, gifts, tax refunds or other random sources of income that you don’t normally rely on or live off of all fit this example.

Pretend these extra sources of income don’t exist and never spend a penny of them. Instead, throw every single penny of them into your First Down Payment account. You might be tempted to use your bonus on a sweet vacation for your family, but keep in mind you bigger goal is owning a home!

Increase Your Income And Don’t Spend A Dime Of It

The last easy way to save for your first house down payment isn’t necessarily fun, but it will get the job done. You can only cut your expenses and save unexpected income to a certain point. However, you can increase your income in many ways and the quickest way is to work more.

If you really want to get your first house sooner rather than later, you can put in extra hours at your job if you’re paid hourly. Overtime pays even better than straight pay which should amp up your savings efforts quite nicely.

Alternatively, if you can’t get paid for extra hours at your current job, you can get a part time job or create a small business on the side that generates some extra income.

Saving up for a your first house and your first down payment isn’t easy. It can be done in just a couple of years rather than a decade if you put your mind to it and use the easy tricks I mentioned above.

They’re all pretty easy to institute but they do require a bit of work and self-restraint. Just remember, it’ll all be worth it when you get the keys to your first home!

How did you save for your first down payment on your first home? I want to hear your stories in the comments below. Of course, if you don’t feel comfortable sharing in public, you can always use my contact form or email me to let me know.

Photo by: roarofthefour Text added by: Lance Cothern

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. I remember the first mortgage lady I ever talked to said we’d be okay to get a loan for 33% of our income. I thought she was nuts! I made sure to keep it around 20-25% and have been thankful ever since.

    • I definitely didn’t get a loan for 33% of my income either, but I saved as if that was my housing expense. It allowed me to save up pretty quickly considering my housing expenses were nowhere near 33% as I had two roommates at the time.

  2. I like your first suggestion – it’s a bit of a spin on the advice I’ve heard before. Sometimes it’s hard to predict what your housing costs will be after you buy, so going with the local average/median as your target percentage makes that calculation easy.

  3. Hi Lance,
    In high cost states its very difficult to save 20%, there are state programs that you can put down 5-10%. I use a piggy back loan of a 1st and 2nd mortgage to avoid PMI. It’s necessary in expensive states where home prices are rising which could cause you to be priced out.

    • That is definitely an option. I’d just make 100% sure you could afford the mortgages and want to stay in the house for a long time. I know you know what you’re doing, but not everyone in a similar situation would. If housing prices dip down, you could end up underwater at the beginning of a mortgage easily.

  4. Unfortunately, we didn’t put much down on our first house- maybe 5k? But, we were young and dumb in our 20’s and didn’t really know better. Now that we’re older (and wiser) we’re putting down a very significant amount of money on the home we close on Monday. I cannot wait!

  5. My husband and I are planning on living in our current high cost area (Brooklyn, NY) due to our relatively stable and low-for-the-area rent and our higher incomes. We are saving to do a down payment on a house in the still affordable region in NE Pennsylvania where $30,000 is all it takes for 20% down on a decent house. We might have to take pay cuts but jobs still are plentiful. I know the importance of the high down payment like you say and that’s our ultimate goal.

  6. Bf and I live in a very high cost of living area, but are planning on purchasing a rental property in an affordable part of Maine by my parents place. 20% down on a decent multi-family would probably be $20-30K, here, you can’t even get a parking spot for $100k.

  7. I live in a city where housing market is overpriced and house rental is as well expensive.with 4 children and the cost of living high,one job won’t cut it.
    So I decided to take another evening full time job and a weekend job as well.
    This is now allowing me to save an extra $1000/month toward my first home down payment. It’s tough on my family because I am now working weekly 100 hours.
    As a christian God is renewing my strength everyday so that I can reach my ultimate goal.

    • Wow! Sounds like you’re really motivated to reach your goal! It is a breath of fresh air to see someone taking action toward their goals and I wish you the best of luck in achieving them. Hopefully you can find a way to cut the hours back a bit and make more money over time.

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