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9 unconventional ways to save money for a down payment on a house

By Shelley Sines

January 2017

I still have a closet stocked with supplies from my flat-broke, jewelry-making college days—boxes full of beads and stones, spools of cord and wire, bracelet and necklace clasps, even packaging complete with tissue paper I’d stamped my name on. My master plan at the time was to “make money” selling jewelry at local festivals and shops. Turns out I was a super prolific jewelry-maker, but my product didn’t move very fast. So while my investment was a great way to spend a weeknight ignoring my homework, it tanked miserably when it came to being profitable.

Then there was the time I promised myself I wouldn’t buy any more lattes before work. Instead, I would put that $5 in my savings account. “If I do this before work each day, I’ll save $1,300 over the course of a year!” I said to myself sagely. Unfortunately, I ended up replacing my morning latte with a morning smoothie that actually cost me slightly more (since I had to get the energy booster shot, too).

More recently, I’ve realized how much money we waste on food in my home. I have a 1-year-old and a 3-year-old, and meal times are literally a recipe for disaster between the mess, the whining and the fact that neither of my adorable children will even touch a vegetable without having a complete meltdown. So I figured, why even bother making dinner for my husband and myself? We can just eat their leftover chicken nuggets and carrot sticks and half-chewed French fries! Anything tastes good with a glass of wine! Unfortunately, my husband values a balanced diet, so I’m back to brainstorming other creative ways for my family to pinch pennies.

If you’re a prospective homebuyer trying to think of new ways to save money, I feel your pain. Luckily for you, I just happen to have some tried-and-true tips that are much more effective than my previous attempts at frugality. When we bought our home, we took advantage of numbers 1, 4, 5 and 8 in the following list — and we were able to get the house we wanted much sooner than expected.

9 unconventional (but practical) ways to save money for a down payment

  1. Pay off your credit card balances in full. This is legit tough and requires real financial sacrifices, but in the end, it’s worth it. Depending on the balance you carry and your interest rate(s), you could be paying hundreds or even thousands of dollars extra each year — money you could otherwise be pocketing to put toward your down payment.
  2. Take advantage of special programs. There are many local, state and federally funded programs that provide down payment assistance and/or affordable rates to qualified borrowers. Check out your state’s Housing Finance Agency (HFA) and other local organizations to see what might be available to you.
  3. Borrow from your retirement accounts. I know, I know, lots of people balk at this option. But depending on your personal situation, it could be a smart way to go. If you borrow money against your 401(k), for example, you’ll end up repaying the principal and interest on that loan to yourself, not to a bank. Of course, there’s a catch: You still have to repay the money just like you would any other loan (sometimes before your employer will let you contribute more funds). And if you lose your job, you may have to repay the entire amount right away. That being said, if you have a stable, promising job (and your age isn’t working against you), you may want to consider this option.
  4. Use gift funds. Whether your parents gifted you cash, or you got married, or you started a GoFundMe account to save money for your starter home, many lenders will allow the use of gift funds toward a down payment.
  5. Get a second job. Okay, this one isn’t so unconventional, but it is practical.
  6. Cash in your savings bonds. Early withdrawals from a traditional IRA or 401(k) result in financial penalties, but you can cash in a savings bond after 5 years with no penalties at all. Not a bad way to benefit from years of super-boring birthday gifts from your elderly Aunt Maude.
  7. Melt down your gold jewelry. Yes, I realize how ridiculous that sounds, but this could actually net you a decent amount of money. (Take that, high school boyfriends. Promise rings are lame anyway.)
  8. Have a rummage sale or post secondhand items to local for-sale/trade boards. There are tons of places you can post your new and gently used belongings for sale that will reach people who live just down the street from you. (Facebook is one of the latest platforms to get on this bandwagon.) It takes a bit of effort to post and follow up with prospective buyers, but you’ll be surprised how much money you can make on the unused junk sitting in your basement.
  9. Use your inheritance. If you’ve come into a sizeable inheritance, don’t let it go to waste. Putting it toward a down payment on a home is one of the safest, smartest investments you can make.

How much do you need to save, regardless of your methods? Run the numbers using our down payment calculator. And when you're deciding how much to save, remember: You might be able to put down less than you think if you use a low-down-payment mortgage option like mortgage insurance.

June Sego

Budgeting is an important aspect of life and in buying a new home. There are various ways to save money and spend wisely. By taking advantage of different programs can be helpful for purchasing a new home.


you can always have 2nd hand closes sales, sale items that you have not used in a long time

Rick Rosell

As I’ve gotten older you realize how much money you can spend and when you look back on everything and see you’ve spent all that money but you have nothing to show for it. Saving money on little things in life and putting it into savings can quickly add up


I have always saved, and fortunately had a great 401k, and pension to help pay down dent and purchase a second home as an investment.

Ahmed mtoor

For cash down payment ill be using my saving money from my job plus ill be using also the tac refund money the i got back from the irs

Christopher Roldan

Thank you for the great information. My wife and I are using our savings from our current jobs and what we got back from the IRS.

Ka Zoua Vang

My husband and I are learning how to save money and budgeting. Spend your money wisely on the things you need only and not the things you want.

Al Rooks

We are still trying to figure out the things we need vs. the things we want BC it seems like we already do that and we still can't seem to get a head.

Laura Silmon

I'm definitely ready. I have not owned a home since 2011.

Karen Ferguson

None of these ideas are really practical! First of all jewellery is pretty much worthless once you leave the store unless you sell privately. I have taken pieces that I paid thousands for only to be told they are only worth a few hundred! Second clothes are not worth the time to have a garage sale, plus those of us who struggle only buy cheap clothing anyway. A second job is unreasonable if you are already working 40+ hours per week! The government needs to step up and fix the issues!


Or you are so poor the only jewelry you have is costume jewelry that was gifted to you and your clothes were already 2nd hand to begin with. Your family is so poor that your inheritance is debt. The only gifts you can get is time or physical help cause no one else has money either. These are great ideas but need more than those.

Kristin Hancock

Very insightful

Ginger Morley

These are not conventional ideas. Many people don't have credit cards, savings, 401K, stocks, or inheritance. A better option for a person without means is to find an owner finance situation, or save money into a savings bond. These can be used as collateral for a loan at a bank for down payment and can use 3-5 years to pay back. Saving bonds can be bought over period of time, and less likely to spend.

Muhammad Sharjeel

Down payment is very important for buying home that could come from savings or gift that helps for down payment

Demarco Mcdaniel

I did my best

Theresa Peterson

I am doing the best I can with the situations that have happened in my past.

Aquiera Halsey

Great summary!

Justin Taylor

Managing/Budgeting your money is the most important step of this whole "Home Bying Process".. if you can't save your money and you have bad spending habits then buying a home may not be what's best for you.

Kevin Ming

I think that you can use your 401k

Cathy Katzenstein

Good ideas. I am older and have had many homes over the years as a co-buyer with my husbands. Now I am widowed and have a stable retirement income, I am at times overwhelmed by the amount of documentation needed to process my loan. Much of the information is duplicated and could be cross referenced. Can’t wait til this part is over.

Beatriz Dada

Paying down credit cards and not eating out will be my target.


Paying down credit cards and saving money is my goal

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Shelley Sines has been writing for MGIC since she graduated from college in 2007. Currently raising a sweet little family with her husband in the suburbs of Milwaukee. Happiest when cooking or gardening. Competitive Scrabble player. Enthusiastic about road trips, wine, good TV.
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