Budgeting for Your First Down Payment
Once you’ve got your mind set on buying your first home you’ll need to figure out how to put together a down payment. Most people find this to be the biggest hurdle to get past and then it’s clear sailing from then on.
Here is a quick guide to help you get started with a down payment budget.
1. Look at homes
Start by taking a look at the Calgary real estate market to get a realistic view of the home prices. Look through houses in different parts of the city since location can play a big factor in pricing.
2. Decide on what you want
Decide whether you want a condo, townhouse or a single family home. After looking through the prices you’ll have a better idea of what you’ll be able to realistically afford.
If you feel that a house will be a bit too much of a stretch take a second look through the condos and townhomes. There are some great units available that are fantastic as a starter home. In a few years you may be able to start looking at the single family homes again.
3. Figure out your down payment
You’ll need to have a solid number in front of you to act as a goal. It’s hard to budget for a down payment without knowing what the final goal is. Figure out the amount and write it down.
4. Put the budget together
This is the time to pull out some paper and get serious about putting together a plan. The pen that you hold in your hand and the paper before you are the tools that are going to lead you towards your home. Write down your income and expenses to figure out exactly how much money you can put away monthly to towards a down payment.
During the process there are probably going to be some things that you leave out. For example, are you factoring in all of the coffees that you pick up on your way to work? If you pay $2.00 for every coffee you buy and purchase one every morning, that’s $60 per month that needs to be worked into your budget. When you have that pen and paper in front of you, you have to remember all of the “coffee” types of expenses to see a true picture.
5. Determine how long it will take
Based on the extra money that you can put aside every month for a down payment, how long will it take you to have this money in your hands?
6. Work with the budget
If you see that it’s going to take too long to put together a down payment this is the time to work with the budget. Either the income is going to have to go up, the expenses are going to have to go down, or a combination of both is going to have to take place. This is where you’re going to have to put together some bright ideas to help you reach your goal faster.
A lot of people take on a second job for a year in order to make things happen quickly. If you can live comfortably on the money you’re currently earning, all of the income you bring in from your second job can be put straight into the down payment savings. If you consider what you’ll achieve as a result of a year of hard work, it may just be worth it.
Some people talk to relatives to borrow money and others sell their second car or boats to get money in their hands quickly. It’s all a matter of what you are willing to compromise in order to own a home.
Once you get over the down payment hurdle you’ll be in a much better position for homeownership. It’s just a matter of making a plan, sticking to it and seeing it through. This is what others have done that you see living in their own Calgary homes and enjoying every second of it. Is it worth it? You bet it is!