How to Save for a Deposit on a House When You’re On a Low Income

If you aren’t making a huge amount of money, the idea of owning a home may seem entirely out of reach. In reality, it’s always worth saving towards this goal, as even putting aside a small amount for a down payment will stand you in good stead for a future property purchase.

To that end, let’s discuss some of the best ways to save with a view to buying your first slice of real estate, even if your income is below average.

Look Into First Time Home Buyer Programs In Your State

This is the most important piece of advice for any would-be homeowner, as schemes are set up across the country to help out first timers who are struggling to save for a deposit.

Obviously you’ll need to look for an initiative that is available for people living in your region. For example, there are first time home buyer grants in Ohio which can give you up to 5 percent of the property’s value to use as part of your down payment.

There will be eligibility requirements to meet, and other terms and conditions to take onboard if you use this type of scheme. Even so, it could be a brilliant opportunity to get on the housing ladder without needing to save for years and years.

Work Out a Budget And a Timeline

It’s perfectly fine to start saving money without a particular end goal in mind, but if buying a house is a priority, you should try to be a little more prescriptive in this regard.

Firstly, find out the size of the down payment you’ll need, and calculate how much you’ll have to save yourself, once you’ve factored in any contribution made by the aforementioned home buyer programs in your state.

With this figure, you can then start to think about how much you’ll have to set aside each month to reach it, and how long this will take.

Let’s say you decide your deposit contribution will have to total around $10,000. By saving around $278 monthly, you’ll reach this target over the course of 3 years.

If you can’t afford to save this much monthly, scale it back and re-do the calculations. Saving $150 a month will get you to the $10,000 mark in five and a half years, for example.

Even students can save, so there’s no reason that if you’re in full time employment you can’t find wiggle room in your budget to build up a house deposit pot.

Don’t Be Afraid to Make Sacrifices

Speaking of budgeting, this is a skill that’s better to learn sooner rather than later, both to help you save for a house, and to generally keep your finances in good order over your entire life.

Rebalancing your budget doesn’t have to be difficult; you just have to look at your monthly incomings and outgoings, and see if there is space to drive down your spending and reallocate your disposable income to your savings instead.

This might mean making some compromises in what you do with your money, and even small changes can make a big impact in the long run.

For example, if you’re regularly spending quite a bit of cash on clothing each month, this is probably an area where you can make major reductions without compromising your quality of life.

In short, people on a low income can combine outside assistance with some personal changes to get over the finish line and finally own their own home.

Featured Image Credit: Pexels