hand dropping coins in a house-shaped bank

If a new home is in your future, now’s the time to think about how much money you’ll need to save for a down payment on a house. If you’re worried you won’t have enough saved by the time you’re ready to buy, consider these strategies.

Review your budget

Take a hard look at where your money is going now. Look for ways to save by cutting spending and putting off big purchases. Create a dedicated Share Account as your house fund. Once you’ve got some savings built up, you may want to transfer your funds to a Money Market Share Account to earn higher dividends. If your time frame is longer than six months, you might also consider putting the funds into a Share Term Certificate to earn even more dividends.

No matter which account you choose to save your money in, go ahead and set up a recurring Funds Transfer to make it easier to save. If you don’t see it, you won’t miss it.

Save windfalls and pay raises

When you receive any tax refunds, work bonuses or pay raises, transfer that extra money into your house fund. Check junk drawers or old safes for long-forgotten savings bonds you might be able to claim. Also, there may be other sources of unclaimed cash out there. Visit the North Carolina State Treasurer’s dedicated site at nccash.com for unclaimed cash you either forgot or didn’t know about. It may be just a few dollars or a few hundred dollars, but every little bit helps. Be sure to add this extra money to the house fund and watch your savings grow.

Look for special programs or incentives

First-time homebuyers often qualify for special terms and incentives. Your Credit Union’s First-Time Homebuyers Loan doesn't require a down payment or private mortgage insurance (PMI). Some lenders add PMI when you don’t make a large down payment. 

Ask family for help

Could a family member be a resource for down payment money? Depending on the amount, your family may be a good option. If you do receive a gift, be sure to document the source of the funds with a gift letter from the donor. Include your and their names and contact information, dollar amount of the gift and funds transfer date. Be sure the letter specifies the money is a gift and that you don’t have to pay it back.

Borrow from retirement savings

Tapping into your IRA or 401(k) plan are options, but these should be last on your list. You’ll want to weigh the pros and cons before moving forward.

You could face income taxes on the amount withdrawn and you’ll reduce your retirement nest egg if you tap into your IRA. You cannot replace the money withdrawn from an IRA like you can with a 401(k). Ask your human resources representative or plan administrator for more information.

Let your Credit Union be a resource

When you’re ready to buy a home, be sure to compare all your options, including LGFCU’s mortgage rates, to ensure you get the best mortgage loan for you.


The advice provided is for informational purposes only. Contact a financial advisor for additional guidance. 

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