Having a baby can put a strain on your finances and stress levels, and saving for a down payment can easily double that strain. It may take a lot of careful planning, penny-pinching and some adjustments to your spending habits, but it is possible to do both simultaneously. Here is our quick guide to budgeting for a baby and down payment.
You should start saving immediately for both your baby and down payment. The sooner you begin, the more cushion you will have when the baby comes. Put aside every extra dollar you have each month into the highest interest savings account you can find.
Work Out What You Need
You should make a list of everything you need for the baby and the new house. You should include potential expenses for the baby up to one year old and any medical needs you or they might have. You should buy all your baby items in advance and shop around for the best deals.
You should prepare for the cost of moving and settling into your new home. Have an emergency fund in case your new home has issues that need to be fixed.
Be Realistic When House Hunting
You should be realistic about what you can afford. If you want to buy a home before having the baby, you may not have enough time to save for your dream house. Work out how much house you can afford, and factor in that one or both of you may be taking parental leave. You should look at modest starter homes to avoid overstretching your finances.
Consider Lower Down Payment Loan Options
You should consider lower down payment loans such as FHA home loans. These loans allow you to buy a home with a down payment of 3.5% instead of the standard 20%. If you are on a tight timescale to buy a home before the baby comes, choosing a low down payment loan could help you get on the property ladder in time.
Prepare For Lowered Income
One or both of you may take parental leave, which can leave you with a lower monthly income. You should decide in advance how much parental leave to take and find out how much paid leave your employer or State provide.
Cut Unnecessary Expenses
You should eliminate all unnecessary expenditure. Make a strict budget and review your monthly outgoings. Avoid spending on meals out, takeaway and days out until you have saved your goal amount.
You should weigh up your options carefully before buying. You may have to accelerate your house buying plans due to a baby on the way, but you should still take time to look over properties carefully. Choose wisely to avoid buying a home that will cost you more in the long term.