As a first time home buyer, one of the biggest challenges when you are pursuing homeownership is saving for a down payment. Depending on the type of loan you receive from your bank, your down payment can be anywhere from as little as 3 to as high as 20% of the home’s total cost. Remember, anything under 20% requires private mortgage insurance which increases your monthly payment. There’s no limit to how much you can put down, and placing a larger down payment will benefit you in the long run. This may seem overwhelming and unachievable at first glance, but there are actionable financial strategies that you can take to alleviate some of this stress and move you one step closer to the home of your dreams. 

Building a Better Budget

The first, and most important step when preparing to save for a down payment is to determine a set budget. By doing so, you will be able to dictate exactly where your money is going each month and how to better allocate those funds. 

Start by determining how much income you bring in each month, making sure to include any additional income from a partner if they will also be contributing to the down payment. Next, gather up all of your monthly bills, including utilities, streaming services, and any other recurring expenses. For the costs that fluctuate each month, organize them by category and determine a general base cost for how much you would like to spend on each of these (i.e. groceries, entertainment, personal wellness, etc.). Once you have determined all of your monthly expenses and where you are spending the most money, you can begin to decide where you could afford to cut back on anything nonessential. Cutting out unnecessary spending and making simple switches, like making your coffee at home instead of buying it, can make a large difference in your monthly funds. 

Finally, set a fixed budget for each category that you intend to stick to each month. Add a category for your down payment savings, considering it a non-optional expense like your monthly rent is. This clear and definitive budget will help you to spend less nonessential money, determine exactly how much you have and where it is going, and put money towards your down payment savings each month. 

Building Savings

Start by setting aside a portion of your paycheck each month to be automatically deposited in a savings account. Once you’ve built up some savings, you can move some into a certificate of deposit or money market account to earn a higher rate of interest.

Pay Off Your Debt

While it may seem counterintuitive to spend money when you are attempting to save, high interest debts such as credit card balances and personal loans can eat away at your savings and wreak havoc on your finances. By paying off high interest debts before beginning your journey to homeownership, you can save more of your paycheck that was originally being lost to high interest rates and increase your credit score, making you a more favorable candidate when applying for a mortgage loan. 

You should also avoid accruing any new major debts during this time. If you have a mortgage application, pre-approval, or financial lending request in place, avoid obtaining any additional debts without consulting your Lending Officer to ensure the integrity of the initial approval.

The Bottom Line

Bottom line, homes are expensive, and your down payment is likely to be the largest expense you have had to endure so far. This process will take some time and some changes to your spending habits, but with a solid saving plan in place, anyone can save enough money for a down payment. With diligent action and by following the steps above, you will be on your way to becoming a homeowner!

Piscataqua Savings Bank Home Mortgage Options

At Piscataqua Savings Bank, we take pride in being one of the Seacoast’s leading home mortgage lenders. We’re a family bank first—where our customers matter most and communication is essential. Our loan officers realize a mortgage is right only when individually tailored for each customer. We specialize in offering solid advice that is carefully composed around your particular circumstances. Learn more about our home mortgage lending program here, call (603) 436-5250 to speak with a loan officer, or visit us in person at 15 Pleasant St in Portsmouth, NH.


Lender NMLS# 406100

FDIC Insured | Equal Housing Lender


Back to News and Insights