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home  ⟩  down payment

9 unconventional ways to save money for a down payment

I’ve done some crazy stuff to try to boost my savings account balance. And although I do give myself points for creativity, even I have to admit that my strategies haven’t been especially practical or sustainable in the long-term.

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I still have a closet stocked with supplies from my flat-broke, jewelry-making college days —boxes full of beads and stones, spools of cord and wire, bracelet and necklace clasps, even packaging complete with tissue paper I’d stamped my name on. My master plan at the time was to “make money” selling jewelry at local festivals and shops. Turns out I was a super prolific jewelry-maker, but my product didn’t move very fast. So while my investment was a great way to spend a weeknight ignoring my homework, it tanked miserably when it came to being profitable.

Then there was the time I promised myself I wouldn’t buy any more lattes before work. Instead, I would put that $5 in my savings account. “If I do this before work each day, I’ll save $1,300 over the course of a year!” I said to myself sagely. Unfortunately, I ended up replacing my morning latte with a morning smoothie that actually cost me slightly more (since I had to get the energy booster shot, too).

More recently, I’ve realized how much money we waste on food in my home. I have a 1-year-old and a 3-year-old, and meal times are literally a recipe for disaster between the mess, the whining and the fact that neither of my adorable children will even touch a vegetable without having a complete meltdown. So I figured, why even bother making dinner for my husband and myself? We can just eat their leftover chicken nuggets and carrot sticks and half-chewed French fries! Anything tastes good with a glass of wine! Unfortunately, my husband values a balanced diet, so I’m back to brainstorming other creative ways for my family to pinch pennies.

If you’re a prospective homebuyer trying to think of new ways to save money, I feel your pain. Luckily for you, I just happen to have some tried-and-true tips that are much more effective than my previous attempts at frugality. When we bought our home, we took advantage of numbers 1, 4, 5 and 8 in the following list — and we were able to get the house we wanted much sooner than expected.

9 unconventional (but practical) ways to save money for a down payment

  1. Pay off your credit card balances in full. This is legit tough and requires real financial sacrifices, but in the end, it’s worth it. Depending on the balance you carry and your interest rate(s), you could be paying hundreds or even thousands of dollars extra each year — money you could otherwise be pocketing to put toward your down payment.
  2. Take advantage of special programs. There are many local, state and federally funded programs that provide down payment assistance and/or affordable rates to qualified borrowers. Check out your state’s Housing Finance Agency (HFA) and other local organizations to see what might be available to you.
  3. Borrow from your retirement accounts. I know, I know, lots of people balk at this option. But depending on your personal situation, it could be a smart way to go. If you borrow money against your 401(k), for example, you’ll end up repaying the principal and interest on that loan to yourself, not to a bank. Of course, there’s a catch: You still have to repay the money just like you would any other loan (sometimes before your employer will let you contribute more funds). And if you lose your job, you may have to repay the entire amount right away. That being said, if you have a stable, promising job (and your age isn’t working against you), you may want to consider this option.
  4. Use gift funds. Whether your parents gifted you cash, or you got married, or you started a GoFundMe account to save money for your starter home, many lenders will allow the use of gift funds toward a down payment.
  5. Get a second job. Okay, this one isn’t so unconventional, but it is practical.
  6. Cash in your savings bonds. Early withdrawals from a traditional IRA or 401(k) result in financial penalties, but you can cash in a savings bond after 5 years with no penalties at all. Not a bad way to benefit from years of super-boring birthday gifts from your elderly Aunt Maude.
  7. Melt down your gold jewelry. Yes, I realize how ridiculous that sounds, but this could actually net you a decent amount of money. (Take that, high school boyfriends. Promise rings are lame anyway.)
  8. Have a rummage sale or post secondhand items to local for-sale/trade boards. There are tons of places you can post your new and gently used belongings for sale that will reach people who live just down the street from you. (Facebook is one of the latest platforms to get on this bandwagon.) It takes a bit of effort to post and follow up with prospective buyers, but you’ll be surprised how much money you can make on the unused junk sitting in your basement.
  9. Use your inheritance. If you’ve come into a sizeable inheritance, don’t let it go to waste. Putting it toward a down payment on a home is one of the safest, smartest investments you can make.