The down payment is often the toughest hurdle to clear when buying a home. Whether you're opting for a Federal Housing Administration mortgage loan with just 3.5 percent down, or shooting for a conventional loan with 20 percent down, saving for a down payment on your first home can take years. It's even more difficult to save when you're juggling rent, living expenses, insurance payments and debt.
Whether your goal is $5,000 or $50,000, consider these 10 simple ways to save for your down payment:
1. Negotiate your rent. With rent likely near the top of your list of expenses, cutting its cost can help you sock away serious savings. If you're a good tenant, approach your landlord about lowering your rent. If that doesn't work, consider downsizing to a smaller, cheaper apartment, and put the money you save on rent directly into savings.
2. Shop around to reduce major monthly expenses. If it's been a while since you checked rates for your car insurance, renter's insurance, health insurance, cable, Internet or cell phone plan, now is the time to look into those costs. You may be able to save hundreds or even thousands of dollars by making alterations to some of these contracts.
3. Check out your IRA. First-time homebuyers can cash out up to $10,000 from an IRA without having to pay the standard 10 percent early withdrawal fee. If you've been saving in an IRA, check your balance, and consider cashing out part of the money to put toward your down payment. You can find out more about the rules for this type of withdrawal at IRs.gov.
4. Look into state and local home-buying programs. Check to see if your state, county or local government operates any programs for first-time homebuyers. Some programs offer housing discounts, while others provide down payment loans or grants.
5. Throw a garage sale. You may be surprised how much money you can make through a garage sale. It probably won't be enough to fund your whole down payment, but garage sale profits can get you started. However, you may be able get better deals on your big-ticket items by selling them on eBay or Craigslist.
6. Monitor your spending online. Do you frequently wonder where your earnings have gone at the end of every month? If this is the case, you can save a lot by tracking your finances and cutting down on discretionary spending. Online tools such as Mint.com, SpringCoin.com and PearBudget.com can help you manage your spending to save more on everyday expenses.
7. Pick up part-time work. Getting a side job is a great way to generate extra income that you can save exclusively for your down payment. Consider freelancing in your field outside of work; you may be surprised how much you can boost your earnings with a few hours of part-time work each week.
8. Refinance debts. Refinancing doesn't just apply to mortgage loans. In fact, you can refinance just about any debt, from credit cards by using balance transfers, to car loans by taking out a lower interest auto loan through a new lender.
9. Cut back on student loan payments. If you're drowning in student loan debt, you may be able to scale back on your student loan payments - especially if you have government-backed loans. Talk to your lender(s) about repayment options, including income-based repayment plans. Adjusting a repayment plan could substantially slash your monthly student loan payments, giving you more room to save for a down payment.
10. Keep track of your progress. It's important to follow your progress toward being able to afford the down payment. Consider posting a savings graph on your fridge. Keeping your progress in front of you can help boost your motivation to keep on keeping on, even when it's tough to save extra money.
Rob Berger is the founder of the personal finance blog the Dough Roller, which covers personal finance and investing topics, including tracking current mortgage rates.