Here’s What We’ll Give Up for a Down Payment on a Home

Good-bye honeymoon, hello second job, but you’ll never get my Netflix

  • By Amy Hoak, Marketwatch
  • July 09, 2014

down payment mortgage

Just how difficult is it for people to come up with a down payment on their first home? It’s so hard that nearly 60 percent of couples would be willing to forgo their honeymoon for a down payment, according to a recent ERA Real Estate survey of 1,000 people in committed relationships. And nearly 50 percent of women said they’d give up a big engagement ring.

Another survey of 500 adults, by the real-estate website Trulia, found that 37 percent of Millennials plan to work a second job to come up with a down payment. Those in the mortgage industry say they’ve heard people selling off their things, from cars to surfboards, to raise the money.

For 60 percent of people between the ages of 18 and 34, their finances are the biggest obstacle to becoming a homeowner, according to Trulia. It’s a reason that first-time buyers have been largely absent from the housing market’s recovery.

Years ago, when mortgage underwriting was much less strict and lending programs more lenient, “there was almost no barrier,” said Cyndee Kendall, regional mortgage sales manager and vice president of the Northern California region for Bank of the West.

“For years, first-time buyers were in their late 20s and early 30s, and they put as much down as they could to qualify and keep their payments low,” said Julie Reynolds, spokeswoman with LoanDepot. “But LoanDepot is seeing their average age inch up and their down payments shrink. A lot of people want to put 10 percent down, but can’t.”

Below are some top ways first-time home buyers are finding money for their down payments — and what to watch out for when taking these avenues.

Cutting Back
No one wants to hear they should give up their morning latte to save. But cutting back somewhere in your expenses can be very effective. “The best way is to save for a down payment over time, from your income,” said Karen Carlson, director of education and creative programs for InCharge Education Foundation, a nonprofit that focuses on personal finance education. 

“Here’s how: downgrade your automobile for lower monthly payments, cut out cable television in favor of an online service, sell your stuff, take on temporary short-term work,” she wrote in an email. (She also notes that saving for a down payment is just the beginning; homeowners also should have a robust emergency fund.)

Brown bagging it at work could save $10 a day, which, for a couple, comes out to $100 a week or $4,800 a year (52 weeks, minus vacation and holidays off), Reynolds suggested.

Here’s the problem: Many millennials have no interest in cutting their little luxuries, according to the Trulia survey. When asked about the items they’d never give up to save for a down payment, 65 percent said their car, 45 percent said their smartphone, 20 percent said their cable, 15 percent said their Netflix subscription, 14 percent said their vacations and 13 percent said dining out.

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