7 small ways to boost your savings for a down payment on a house (2024)

With interest rates ticking up to 7.17% during the last week of April, the typical monthly mortgage payment for a median-priced home is likely out of reach for many first-time homebuyers.

A recent study by the California Association of Realtors shows that California housing affordability is at the lowest level in 16 years, due to higher borrowing costs and a shortage of available homes for sale. Less than 1-in-5 (or 20%) Californians earned the minimum qualifying income needed to purchase a median-priced home in California last year.

In San Mateo County, only 17% of homebuyers could afford to purchase a home, and in Santa Clara County, only 18% of homebuyers could afford one.

To purchase the statewide median-priced home of $833,170, a buyer would have to make monthly payments of $5,570, including principal, interest and taxes on a 30-year fixed-rate mortgage, assuming a 20% down payment and an interest rate above 7%, according to the report.

“Just because you can’t qualify for a mortgage now doesn’t mean an end to your dream of homeownership,” Eileen Giorgi, president of the Silicon Valley Association of Realtors, said. “There are many ways to up your savings, but you should start now.”

Here are seven ways to boost your savings:

Track your spending

At the end of each month, take a closer look at how much you spend at the grocery store, your payments for utilities, rent and gas, and other miscellaneous expenses. See which expenses are necessary and which items you could do without.

Use cash

There’s a psychological advantage to using cash for daily expenses. It’s harder to have cash leave your wallet than swiping a card or tapping your phone when spending money.

Use a credit card that offers cash back

If you use a credit card for some expenses, make sure your card offers cash back and has a no annual fee. Most importantly, if using the card, make sure you can pay off the balance each month.

Eliminate automatic subscription payments

Signing up for services that automatically renew each month or year, such as magazines, streaming services, gym memberships, music subscriptions and data storage, is easy. These expenses add up quickly. Cancel automatic subscriptions that you don’t need.

Check your weekly grocery ad for coupons and shopper savings or download the grocery store’s digital app to find the best prices, and clip coupons for products you need. Using the digital app or store card will earn you reward points, which can include discounts on gas.

Lower your utility bills

Consider getting an energy auditto pinpoint ways to reduce your electricity usage. Electric companies typically offer this service for free.

Cut back on your electricity usage from 8 a.m. to 10 p.m. when electricity rates are typically at their peak. Also, according to the U.S. Department of Energy, it’s best to keep your thermostat at 68 degrees for most of the day during the winter season. A programmable or smart thermostatcan help trim your bill.

Reduce your water and power bills by decreasing yourhot water usage. Other ways to shrink energy consumption is toadd insulationto your attic, replace your incandescent bulbs with energy-efficientLED light bulbs and replace major appliances with Energy Star-certified appliances. By using Energy Star appliances, a typical household can save about $450 on their energy bills each year, according to the Department of Energy.

Check out down payment programs

Down payment assistance programs often fly under the radar for potential homebuyers.

Government programs, such as the Federal Housing Administration (FHA) home loan program, Veterans home loans (VA) program or U.S. Department of Agriculture (USDA) home loans program can help make homeownership more attainable.

The California Housing Finance Agency (CalHFA) offers several options for down payment and closing cost assistance where payments are deferred until the home is sold, refinanced or paid in full.

The Housing Trust Silicon Valley has Empower Homebuyers, a down payment assistance loan for first-time homebuyers in Santa Clara County. If a homebuyer can come up with at least 3% of a home’s purchase price, an Empower loan can provide 17% of the price, to help meet a 20% down payment on a home priced up to $1.1 million.

CalHFA offers several options for down payment and closing cost assistance where payments are deferred until the home is sold, refinanced or paid in full.

“Be consistent. These improvements to your savings, including depositing a portion of your paycheck directly into your savings account, or even simple things like gathering small change and keeping it in a savings jar can add up to big rewards sooner than you think,” Giorgi said.

Silicon Valley Association of Realtors (SILVAR)is a professional trade organization representing 5,000 Realtors and affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term Realtor is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of Realtors and who subscribes to its strict Code of Ethics.