Top Ways that Millennials Are Saving For Down Payments

• Author: Margaret Hills
• Posted: 2024-07-06

For most prospective homebuyers, the down payment is one of the biggest hurdles. Even if you can find a great mortgage rate, you still need some money saved up to pay a down payment on the home. Fortunately, this isn't a task you have to tackle all by yourself. You can get tips from others and find some surprising ways to save. The recently-released 2023 Millennial Homebuyer Report reveals new ways that the most recent generation of homeowners saved for a down payment. Using this insight can help you overcome the challenges of dealing with the modern housing market. Ranked in order from most popular to least, here are the top ways millennials save.
 

Saving Part of Each Paycheck

With 50% of millennials saying they used this method to save a down payment, it's the most popular method to save. This technique for getting a down payment consists of just choosing a set amount of your paycheck to set aside in a savings account. Some people like to set aside a percentage while others choose a flat rate like $500 per paycheck. Even if you can only set aside a small amount of money, this technique is still worth following. Saving at a slow yet steady rate might not be exciting, but it can still be wildly effective.
 

Reducing Non-Essential Spending

40% of millennials say they cut back on non-essential spending such as eating out, buying new clothes, or going to concerts. Some millennials choose a very flexible version of saving where they just try to save more and go out less. Others prefer a more defined saving method such as committing to not ordering coffee anymore and putting the price of each coffee in a special savings account.
 

Finding Another Form of Income

An unfortunate reality is that modern jobs don't typically provide enough money to pay for expenses and save for a home. Many millennials have joined "hustle culture" in order to get a house. They end up taking part-time jobs, monetizing their hobbies, or finding other creative ways to make extra money. This is certainly an exhausting task that isn't sustainable in the long run, but if you want to save a down payment as quickly as possible, it can be effective.
 

Moving to a Higher-Paying Job

It's easy to stagnate and stay in a career because it's familiar and safe. While it can be worthwhile to work a lower-paying job that you enjoy sometimes, this strategy isn't effective while saving for a down payment. 32% of millennials were only able to save for a house by switching to a job that pays more.
 

Living With Family

Did you know that roughly a quarter of all millennials saving for a down payment ended up moving in with family? Since living expenses are so high lately, this can be one of the only ways to save. Though it's not a favorite option for those who don't get along with their family, it can help save a lot of money. By getting rid of rent payments or utilities, some millennials are able to get a down payment.
 

Investing Money

This method of saving for homes is less common because it's quite risky. Theoretically, you might be able to buy a home with stock market dividends. However, you can lose money just as easily. If you want to save a down payment through investing, make sure you do your research and choose your investments wisely.
 

Skipping Other Bills

13% of millennials say that they skipped paying other bills and went into debt while saving for a down payment. In theory, this can pay off. Finally building equity in your own home can make up for a few years of paying down a credit card. Just keep in mind that skipping bills and taking on debt will affect your credit score. It can make it harder to get a good mortgage in the future, so this technique won't make financial sense for most people.

As you can see, there are a lot of different popular ways to save for a down payment. Even if one option on this list doesn't work for you, another might. Keep in mind that you can also adjust these tips and find your own creative ways of saving. Though saving up for a down payment is certainly tough, many people can discover ways to achieve this goal.