How do you save for downpayments?

Question

What's the most efficient way to save for downpayments?

Josh St Laurent · Answer

Automating the savings (direct deposit, auto transfer, etc) and then making sure you're maximizing the return on that money. Interest bearing account like a HYSA if you're buying within the year. Investing it if your timeline is over a year.

Making it automatic is more powerful than it seems. Treat your down payment account like a 401k contribute to it every time you get paid and make sure the money is working for you. Hope this helps!

Paul Novak · Answer

I have used a combination of debt and savings for down payments.  Ether way it takes capital accumulation to come up with cash for down payments.

The traditional way I have done it is taking money from each paycheck and holding it in the cash position in my taxable brokerage with Fidelity until I have enough saved up for a down payment.  I have been earning anywhere from 3.75% to 4% on my uninvested cash.

The other option I have done is pulled money from my 401K as a means for down payments in essence borrowing from myself and paying myself back the interest.  In this case I follow a similar approach as the one above I just get the money upfront and then pay myself back over time.

The last option I have done is used my HELOC.  In this case the interest goes back to the bank vs. my 401K account but I borrow to get the money up front and then work to pay it back over time.

Matthew Paul · Answer

Stop spending .  Grab a second job ,  there are hundreds of ways . It all depends on how hard you put your mind  to it

How do you save for downpayments?

Most Popular Reply