Tips for Saving Up for a Down Payment While Renting
If you want to buy a home, you need to save money for a down payment. But if you’re a renter, that can prove challenging, since renting is often expensive. According to a report from realtor.com, in July 2022 (the most recent data available), median rent in the 50 largest metros in the US was $1879—a record high for the 17th straight month.
So the question is: how do you save money for a down payment while you’re also putting a lot of money towards rent?
A recent article from realtor.com outlined strategies soon-to-be homeowners can use to save money for a down payment while actively renting property, including:
- Consider downsizing to a smaller rental… If you know you want to buy a home, one great way to save money for a down payment is to downsize to a smaller—and more affordable—rental. While living in a smaller apartment or rental property may not be viable for the long term (particularly if you have a larger family), doing so for a short period of time could help you save money for a down payment, and knowing the situation is temporary could help you better deal with living in a smaller space.
- …or moving to an area with more affordable rent. If you have a job that allows you to work remotely, you have flexibility in where you live. And so, if you want to save money for a home purchase, why not move somewhere with more affordable rents? Not only can moving to a more affordable area help you stash away money for your down payment while you rent, but chances are home prices will also be more affordable—which means you’ll be able to save for and purchase your home faster.
- Pay rent with a cash-back credit card. If moving isn’t an option, see if you can pay your rent using a cash-back credit card. Some credit cards offer as much as 5 percent cash back on purchases—cash you can put towards a down payment. (Just make sure to pay off your balance each month to avoid accumulating any additional debt, which won’t help you on your road to homeownership.)