This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.
These moves could put you on the path to homeownership.
Image source: Getty Images
If you’re looking to buy a home, you’ll need more money than usual to pull that off. The reason? Home prices are up on a national level. And while they have the potential to fall next year, they’re unlikely to plunge to pre-2020 levels. The U.S. real estate market still lacks inventory in a very big way. And until housing supply picks up, higher prices are likely here to stay.
Meanwhile, it’s a good idea to bring a 20% down payment to the table if you’re planning to take out a conventional mortgage. If you put down less than 20% of your home’s purchase price, you’ll be hit with private mortgage insurance (PMI), which is a costly premium that typically gets tacked onto your monthly home loan payments.
PMI is worth avoiding at a time when you’re already looking at spending more on housing payments due to higher-than-average home prices and mortgage rates. So if you’re hoping to boost your down payment funds in 2023, here’s how.
1. Get on a budget
Following a budget could make it easier to manage your money and find ways to reduce your spending. It pays to set up a budget either on your laptop, on paper, or via an app. Many budgeting apps, in fact, link up to your checking account and credit card accounts so your purchases are tracked automatically, making it easier to see where your money is going.
2. Reduce a few key expenses
Are there things you’re spending money on right now that you can technically do without? If you’re hoping to buy a home sooner rather than later, it may be worth giving some of those things up to boost your savings rate. That could mean pledging not to dine out more than once a month in 2023, or sticking to staycations when you have time off from work rather than paying for flights and lodging.
3. Get a side hustle
The gig economy is strong these days, and working a second job could be your ticket to buying a home despite the challenges today’s buyers face. The beauty of side hustle earnings is that the money you bring home won’t be earmarked for existing expenses. If you’re able to earn $100 a week in 2023 after taxes, you’ll have a cool $5,000 more to put down on a home by the end of the year.
Don’t skimp on a down payment
Many mortgage lenders will let you put less than 20% down on a home. But if you want to avoid PMI, then it pays to aim for 20% — even if it means having to wait a bit longer to buy.
Also, the more money you’re able to put down on your home, the more equity you’ll start out with. That’s an important thing when you’re buying at a time when home prices are elevated. That way, if prices start to fall, you’ll be less likely to wind up underwater on your mortgage.
If you can’t manage a 20% down payment on a home given today’s prices, you should try to get as close as possible. And these moves could help you close out 2023 with a lot more money to put toward a home purchase.
Our picks for the best credit cards
Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
